The CFPB accuses two of the nation’s largest credit repair companies of cheating and cheating customers

Two of the nation’s largest credit companies were illegally charging customers for credit repair services and using misleading advertisements to deceive and deceive consumers, the Consumer Financial Protection Bureau complaints.

The CFPB lodged a complaint this week against CreditRepair.com and Lexington’s Lawwhich the bureau says are two of the nation’s largest credit repair companies, alleging the companies violated the telemarketing sales rule by requesting and receiving payment of prohibited upfront fees for credit repair services.

The lawsuit also claims that the companies violated the Consumer Financial Protection Act by making false statements in their advertisements or by “substantially assisting” others to do so.

The lawsuit also names several other companies, all of which are linked or associated with consumer outlets CreditRepair.com and Lexington Law.

Names of CFPB lawsuits PGX Management and subsidiaries progressive marketing, Progrexion teleservices, eFolks, and CreditRepair.com; and against John C. Heath, lawyerwhich does business as Lexington Law.

Relationships between the companies are complicated, with different subsidiaries performing transactions on behalf of other companies and, in the case of Lexington Law, Progrexion handles most of Lexington Law’s core business activities, but Heath, operating as Lexington Law Firmserves as the face of Lexington Law, according to the CFPB.

Companies are also reportedly using each other as lead generation outlets for credit repair services, and that, according to the CFPB, is where the problems begin.

“Defendants operate two of the nation’s largest credit repair companies, Lexington Law and CreditRepair.com. They market their services through various media, including online and over the phone, offering to help consumers remove negative information from their credit reports and improve their credit scores,” the CFPB said in its statement. trial.

“Consumers sign up for defendants’ credit repair services and pay hundreds of dollars in fees to improve their credit scores and get better access to credit products, on better terms,” ​​the CFPB continued.

To generate business, companies would use a network of marketing affiliates that advertise a variety of products and services, often related to consumer credit products, the CFPB said.

But this publicity is not always on the rise, says the CFPB.

“Progrexion’s marketing affiliates used deceptive and baited advertisements to generate referrals to Lexington Law’s credit repair service,” the CFPB said.

In one example, one of Progrexion’s “most productive marketing affiliates falsely advertised” that they were guaranteeing “EVERYONE a 0-3.5% home loan, no matter how bad their credit was at the start!”

But, according to the CFPB, the subsidiary did not grant any loans. Instead, interested consumers were told that in order to participate in the (nonexistent) loan program, they had to register with Lexington Law.

According to the CFPB, Progrexion companies paid this affiliate marketer for every credit repair sale resulting from its efforts, knowing that it was engaging in deceptive practices.

Beyond that, the companies also allegedly violated the law by requiring and accepting upfront payment for certain credit repair activities.

As the CFPB points out, federal law prohibits requesting or receiving upfront payment for certain telemarketing credit repair services. Specifically, if a company offers services claiming to remove derogatory information or improve a person’s credit history, credit file, or credit rating, charges may only be collected after a certain period of time and that it has been demonstrated that the results have been achieved.

But according to the CFPB, Progrexion companies were charging consumers when they signed up for their credit repair services and on a monthly basis thereafter, ignoring the appropriate waiting period and without demonstrating that the promised results had been achieved.

According to the CFPB, Progrexion makes most of its money by selling the credit repair services offered by Lexington Law.

And the company sells these services by working with “affiliates” who send business to companies through several methods, including a “hotswap” calling program.

Through this program, Progrexion companies partner with companies that offer certain products such as lease-to-own contracts, mortgages, auto loans, or personal loans.

Affiliates market their loans through inbound and outbound calls. During these calls, affiliates identify consumers who may potentially need credit repair services.

While these people are still on the phone, their call is transferred from the affiliate to one of the Progrexion companies so that the company can begin selling its credit repair services. This call transfer is called “hotswap”.

According to the CFPB, hotswaps usually occur directly after a caller has been denied a loan.

“The Hotswap program aims to convince consumers to purchase credit repair services when they have been denied a product or service they want,” the CFPB said. “According to the Progrexion website, ‘This call-based program is so effective because it connects people to credit repair at the time they’ve been denied credit.'”

According to the CFPB, a “significant portion” of corporate credit repair activity is generated by these hotswaps.

In other cases, some of these affiliates used “advertisements that included false real estate listings, false rent-to-own opportunities, false lender relationships, false credit guarantees, and false statements and not based on consumers’ past performance”, as well as “false and unsubstantiated statements about the likelihood that consumers will succeed in obtaining products and services such as lease-to-own contracts, mortgages or personal loans as inducements to try to entice consumers to call.

In one instance, one of Progrexion’s most prodigious lead sources was a company that supposedly offered low-interest mortgages, access to rent-to-own homes, and other products or services, but who in fact did not provide any of these products or services.

According to the CFPB, the company admitted that it was merely acting as an “affiliated call center that refers potential clients to Lexington Law.” The limited company was responsible for sending Progrexion more than 100,000 people who signed up for credit repair services over a five-year period.

The CFPB is suing the Progrexion Companies to restrain them from “engaging in continuing illegal practices that harm consumers nationwide by charging consumers illegal advance fees for credit repair services and by marketing and telemarketing these services through misleading representations, and to obtain redress for consumers who have been harmed by these practices.

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