The Consumer Financial Protection Bureau (CFPB) is distributing $1.8 billion to 4.3 million consumers that were illegally charged by credit repair companies.
The consumers were charged illegal advance fees or were subjected to allegedly deceptive bait-and-switch advertising by a group of credit repair companies, including Lexington Law and CreditRepair.com.
The payments represent the largest-ever distribution from the CFPB victims’ relief fund.
“Lexington Law and CreditRepair.com exploited vulnerable consumers who were trying to rebuild their credit, charging them illegal junk fees for results they hadn’t delivered,” CFPB Director Rohit Chopra said. “This historic distribution of $1.8 billion demonstrates the CFPB’s commitment to making consumers whole, even when the companies that harm them shut down or declare bankruptcy.”
The CFPB secured a legal judgment against the credit repair conglomerate in August 2023 after a district court ruled that the companies had violated the Telemarketing Sales Rule’s advance fee prohibition. Under federal law, credit repair companies that engage in telemarketing cannot collect fees until they provide documentation to consumers showing they have achieved the promised results.
After the court’s ruling, the companies filed for Chapter 11 bankruptcy protection, shuttering approximately 80 percent of their business operations.
The CFPB’s $1.8 billion distribution to consumers harmed by the credit repair companies is a result of the agency’s enforcement action.
Consumers harmed by Lexington Law, CreditRepair.com, and their parent companies will be sent a payment in the coming weeks. Eligible consumers do not need to take any action to receive a payment. Checks are being mailed between December and January. Consumers who believe they are eligible but who have not received a payment by mid-January can contact JND at www.cfpb-lexlaw.org.
Since opening its doors in 2011, the CFPB has distributed more than $3.3 billion through the victims relief fund.