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

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Two of the country’s largest credit companies illegally billed customers for credit repair services and used deceptive advertisements to deceive and deceive consumers, the Consumer Financial Protection Bureau complaints.

The CFPB this week filed a lawsuit against CreditRepair.com and Lexington’s Law, who the bureau says are two of the nation’s largest credit repair companies, alleging that the companies broke the telemarketing rule by requesting and receiving payment for prohibited upfront fees for credit repair services .

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

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

The names of the CFPB trial PGX Fund and subsidiaries Progrexion Marketing, Progrexion Teleservices, eFolksand CreditRepair.com; and against John C. Heath, lawyer, which does business as Lexington Law.

Relationships between the companies are complicated, with different subsidiaries doing business on behalf of other companies, and in the case of Lexington Law, Progrexion carries out most of Lexington Law’s core business, but Heath, operating as Lexington Law Firm, is the face of Lexington Law, according to the CFPB.

Companies have also reportedly used themselves as lead outlets for credit repair services, and the problems start, according to the CFPB.

“The 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, ”CFPB said in its action in justice.

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

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

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

“Progrexion’s marketing affiliates used deceptive bait ads to drive referrals to Lexington Law’s credit repair service,” CFPB said.

In one example, one of Progrexion’s “Most Successful Marketing Affiliates falsely advertised” that they guaranteed “EVERYBODY a 0-3.5% home loan, regardless of credit level at the start!” ”

But, according to the CFPB, the affiliate did not grant any bad credit loans. Rather, interested consumers were told that in order to participate in the (non-existent) loan program they had to subscribe to Lexington Law.

According to the CFPB, the Progrexion companies paid this affiliate marketer for every credit repair sale resulting from their efforts, despite knowing they had engaged in deceptive practices.

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

As the CFPB notes, federal law prohibits requesting or receiving upfront payment for certain telemarketed credit repair services. Specifically, if a company offers services that purport to remove derogatory information from, or improve, a person’s credit history, credit report, or credit rating, the fee can only be collected after a certain amount of time has elapsed. time consuming and it has been shown that the promise of results has been achieved.

But according to the CFPB, the Progrexion companies billed consumers when they signed up for their credit repair services and on a monthly basis thereafter, ignoring the appropriate waiting period and failing to demonstrate that the promised results were achieved.

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

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

Through this program, Progrexion businesses partner with businesses that offer certain products such as home capital leases, mortgages, auto loans or personal loans.

Affiliates market their loans through inbound and outbound calls. During these calls, affiliates identify consumers who could 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 the company can start selling its credit repair services. This call transfer is called a “hot swap”.

According to the CFPB, hotswaps typically 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 wanted,” CFPB said. “According to the Progrexion website, ‘This call-based program is so effective because it connects people to credit repair the moment they’ve been denied credit.’”

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

In other cases, some of these affiliates used “advertisements which included bogus real estate listings, bogus rental housing opportunities, bogus relationships with lenders, bogus credit guarantees, and false and unsubstantiated statements. past consumer performance, “as well as” false and unsubstantiated claims about consumers’ chances of success in obtaining products and services such as capital leases, mortgages or personal loans “, as incentives to trying to get consumers to call.

In one case, one of Progrexion’s most prodigious sources of lead was a business that was supposed to offer low-interest mortgages, access to rent-to-own housing, and other products or services, but who in reality did not provide such products or services.

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

CFPB is suing Progrexion companies to prevent them from “engaging in ongoing illegal practices that harm consumers nationwide by charging consumers illegal upfront fees related to 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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