On the same day that a bankruptcy court judge approved the sale of the assets of Lexington Law and its parent company, PGX Holdings, Inc., the Consumer Financial Protection Bureau announced it had reached a settlement with the companies that will impose a $2.7 billion judgment and ban the companies from telemarketing credit repair services for 10 years.
A copy of the proposed stipulated final judgment in the case of Bureau of Consumer Financial Protection v. Progrexion Marketing et al. can be accessed by clicking here.
This action started all the way back in 2019, when the CFPB accused the defendants of violating the Telemarketing Sales Rule by engaging in bait advertising and requesting upfront payments for credit repair services. The CFPB had been seeking $3.1 billion in fines and penalties — the amount that the defendants allegedly received from consumers. The parent company of Lexington Law had filed for bankruptcy protection back in June after it was found to have violated the Telemarketing Sales Rule and a judge yesterday approved the sale of its assets.
If approved by the judge, the defendants will be banned from telemarketing or selling credit repair services for 10 years, notify any consumers who were previously signed up through telemarketing about the settlement, impose a $2.7 billion judgment, and $64 million in additional civil penalties. Given the financial state of the defendants, the CFPB said it would determine whether consumers can receive restitution through the CFPB’s victim’s relief fund. At its peak, the defendants had more than 4 million customers and had combined revenues of $388 million per year.
“Americans across the country looking to improve their credit scores have turned to companies like CreditRepair.com and Lexington Law. These credit repair giants used fake real estate and rent-to-own opportunities to illegally bait people and pad their pockets with billions in fees,” said CFPB Director Rohit Chopra, in a statement. “This scam is another sign that we must do more to fix the credit reporting and scoring system in our country.”
