$1.8B Payout Headed to Lexington Law, CreditRepair.com Customers in Historic CFPB Action

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The Consumer Financial Protection Bureau (CFPB) announced on December 5 that $1.8 billion is being issued to 4.3 million consumers who were charged unlawful upfront fees or deceived by bait-and-switch advertising by major credit repair companies Lexington Law and CreditRepair.com.

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In a stipulated final judgment and order filed in August 2023, the court found that Lexington Law, CreditRepair.com, their parent companies and a slew of affiliates—some of the largest credit repair brands nationwide—had violated certain federal consumer protection laws.

As a result of the court’s judgment, the CFPB is distributing $1.8 billion in refunds to consumers who were harmed by the credit repair companies’ illegal practices, the agency said in a December 5 press release.

According to the case’s official website, CFPB-LexLaw.org, consumers eligible for a payout—identified through defendant records—include anyone who made a payment to Lexington Law or CreditRepair.com for credit repair services purchased between March 8, 2016 and August 30, 2023, after being subject to telemarketing in connection with these services. Per the website, the matter also includes those who made a payment to one of these companies from July 21, 2011 to August 30, 2023 after being live-transferred by one of the defendants’ marketing affiliates allegedly involved in deceptive advertising.

Eligible consumers do not need to do anything to receive a payment, the site relays. Checks will be mailed during a six-week period from December 5, 2024 to January 6, 2025, with individual payment amounts based on a pro-rated share of the fees consumers paid to Lexington Law and CreditRepair.com, the website states.

The final payout amount may not cover all the fees a consumer paid to the companies, the site notes.

According to the press release, $1.8 billion is so far the largest distribution to come from the CFPB’s victims relief fund, which is fully financed through civil penalties paid by entities that have violated consumer financial protection laws.

According to the August 2023 order, the court determined that Lexington Law and CreditRepair.com violated the federal Telemarketing Sales Rule (TSR), which mandates that fees for credit repair services can be collected only after consumers have been provided with documentation reflecting that the promised results were achieved. The companies’ assessment of advance fees for their services breached these requirements, the document charged.

In addition, the court concluded that the credit repair companies had engaged in misleading marketing tactics to entice consumers to sign up for their services, in violation of the TSR and federal Consumer Financial Protection Act.

The court’s order imposes a nearly $2.7 billion judgment against the defendants, a $45 million civil penalty against CreditRepair.com’s parent company, and an $18 million civil penalty against Lexington Law. In addition, the defendants are banned from telemarketing credit repair services for 10 years.

A press release issued on August 28, 2023 says that the companies filed for bankruptcy following the court’s ruling.

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