The companies that operate Lexington Law and CreditRepair.com have filed a motion to dismiss a lawsuit filed against it by the Consumer Financial Protection Bureau, arguing the complaint does not state a claim, some of the claims are untimely, and the leadership structure of the bureau is unconstitutional.
Having received approval to file an “overlength” motion, attorneys for the defendants submitted a 32-page brief arguing why the lawsuit against the companies should be thrown out. In May, the CFPB sued Lexington Law and a number of companies operating under PGX Holdings, Inc. for violating the Telemarketing Sales Rules by engaging in “bait advertising” and “requesting or receiving payment upfront for certain telemarketed credit repair services.”
A copy of the motion can be accessed by clicking here.
One of the primary issues is a relationship between a company known as a “hotswap” partner — HSP1 — that referred business to the defendants via a live transfer. Individuals would contact HSP1 seeking mortgages or rent-to-own housing contracts, but instead of checking their credit, HSP1 representatives would allegedly refer individuals to the defendant to obtain credit repair services.
CFPB does not state a claim for deceptive conduct by any of the Defendants because it does not actually allege that any of them actually made any statements about the availability of the introducer’s financial product or provided any sort of guarantee. In both counts, the Complaint offers no substance at all as to what the Defendants actually did, only vaguely alleging “the Progrexion Defendants, directly or through at least one affiliate, acting on Progrexion’s behalf and for its benefit” made both statements “expressly or by implication”. This does not actually say that Defendants did anything deceptive, but instead hides behind the disjunctive “or” in identifying the speaker of the fraud and then throws in the catchall that statements were made (by someone) either expressly or impliedly. In doing so, the CFPB has failed to plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
