J. David Ake/Getty Images
TAKEAWAYS KEY
- The CFPB is distributing $1.8 billion among 4.3 millions consumers who were charged by companies that provide credit repair services illegal fees or exposed to alleged deceptive advertising.
- A district court ruling that the Federal Telemarketing Sales Rule was violated by multiple credit repair firms, such as Lexington Law and CreditRepair.com led to the settlement of $2.7 Billion with the watchdog bureau.
- According to the companies, they had charged fees for telemarketed services of credit repair too early and engaged in deceptive practices.
Consumer Financial Protection Bureau will give $1.8 billion in credit repair funds to 4.3 millions consumers.
Multiple credit repair companies, including Lexington Law and CreditRepair.com, will have to pay the largest-ever distribution amount to the CFPB’s victim relief fund after the government's consumer watchdog found customers were charged illegal fees or subjected to allegedly deceptive bait-and-switch advertising.
In the past, after the district court had ruled the violation of federal law by the two companies in question, the Bureau proposed an initial settlement. After the court ruling, the firm filed for Chapter 11 bankruptcy and closed 80% of their operations.
The companies allegedly charged consumers for telemarketed services to repair credit before providing proof of the results promised. According to the bureau, these companies also used deceptive advertising practices to get consumers to pay for credit repair.
“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,” Rohit Chhopra, the Director of CFPB said in a written statement.
Starting Dec. 5, the CFPB distributes civil penalties funds to harmed consumers and provides consumer redress. Customers who have been harmed by the lawsuit will also be prohibited from receiving telemarketing services to repair credit for the next 10 years.
Correction, Dec. 5, 2024: A previous version of this article misstated the amount the CFPB will distribute in redress checks — it's $1.8 billion.
Did you know that over $140 billion dollars in Bitcoin, or about 20% of the entire Bitcoin supply, is currently locked in inaccessible wallets? Or maybe you have lost access to your Bitcoin wallet? Don’t let those funds remain out of reach! AI Seed Phrase Finder is here to help you regain access effortlessly. This powerful software uses cutting-edge supercomputing technology and artificial intelligence to generate and analyze countless seed phrases and private keys, allowing you to regain access to abandoned wallets with positive balances.
