Feds Seek Massive $3 Billion Penalty Against CreditRepair.com

The firm is accused of using "bait advertising" to lure customers.

Feds Seek Massive $3 Billion Penalty Against CreditRepair.com
Photo by Dylan Gillis / Unsplash

The Consumer Financial Protection Bureau has raised the stakes in a long-running case against CreditRepair.com, asking a Utah federal judge to assess $3.1 billion in penalties for violations of the Telemarketing Sales Rule.

The case has been working its way through the courts since 2019, when the CFPB sued CreditRepair.com, Lexington Law and a number of other affiliated companies, accusing them of engaging in "bait advertising" and seeking upfront payments for credit repair services. A copy of the complaint filed in federal district court in the District of Utah is available online.

At least four million consumers were taken in by the alleged scheme, the lawsuit alleges.

“Defendants have shown no willingness to comply with the law absent an injunction,” the CFPB wrote in a motion seeking the penalty. “Defendants never changed their unlawful billing practices despite the straightforward language of [the telemarketing rule] and despite notice that a federal agency charged with enforcing the rule considered their practices illegal.

The CFPB is asking Judge Bruce S. Jenkins to award consumers who paid for Lexington Law’s credit repair services $2.75 billion in restitution, $367 million to consumers who paid for CreditRepair.com’s services, as well as $17 million in civil money penalties for company executives, and $35 million in civil money penalties to the other defendants.

Last month, the judge granted a motion filed by the CFPB for partial summary judgment on the count that the defendants had violated a provision of the TSR dating back to 2016. That led the CFPB to file its motion for monetary and injunctive relief, according to AccountsRecovery.net.

Mixed reviews

The company claims to help consumers repair their credit scores and dispute incorrect reports to credit bureaus. Although it gets good scores from review sites like ConsumerAffairs and TrustPilot, many consumers say they got little benefit from the service.

In a review posted on ConsumerAffairs, Frank of Tuckerton, NJ, said: "Paid Creditrepair.com & their other company LexingtonLaw for many months with no results! I canceled both companies after paying almost a year & no results!"

"This company took my money and did nothing," said a consumer named Richie in a post on TrustPilot. "They played me for almost 9 months I gave them over $700.00 and they did nothing to help my credit. All I needed was to remove 1 item and they could not do that."