Lexington Law was a credit repair company that was founded in 1998. It was one of the largest credit repair companies in the country, with over 1 million customers. The company offered a variety of services, including disputing inaccurate information on credit reports, negotiating with creditors, and providing educational resources.
In 2022, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Lexington Law and its parent company, PGX Holdings, Inc., alleging that they had violated the Telemarketing Sales Rule (TSR) by collecting upfront fees for credit repair services. The TSR prohibits telemarketers from charging any fees before they have provided consumers with documentation reflecting that the promised results have been achieved.
The CFPB also alleged that Lexington Law had engaged in deceptive marketing practices. For example, the company had allegedly misled consumers about its success rates and had made false promises about how quickly it could improve credit scores.
In August 2023, Lexington Law and PGX Holdings agreed to a $2.7 billion settlement with the CFPB. As part of the settlement, the companies will be banned from telemarketing credit repair services for 10 years.
The company did wrong by collecting upfront fees for credit repair services in violation of the TSR. They also engaged in deceptive marketing practices by misleading consumers about their success rates and making false promises about how quickly they could improve credit scores.
The telemarketing portion of Lexington Law's business was responsible for contacting consumers and persuading them to sign up for the company's credit repair services. The telemarketers would often use high-pressure sales tactics and make false promises about how quickly the company could improve consumers' credit scores.
The telemarketing business worked like this:
1. Lexington Law would purchase lists of consumers who were likely to be interested in credit repair services.
2. The telemarketers would then call these consumers and try to sell them on the company's services.
3. If the consumer agreed to sign up for the services, they would be required to pay an upfront fee.
4. The telemarketers would then forward the consumer's information to the company's credit repair team.
The telemarketing business was a major source of revenue for Lexington Law. However, it was also the source of many of the company's problems. The telemarketers were often untrained and inexperienced, and they would often make false promises to consumers. This led to many consumers filing complaints against the company.
The CFPB's settlement with Lexington Law prohibits the company from using telemarketing to sell credit repair services for 10 years. This will significantly reduce the company's ability to generate revenue. It is unclear how Lexington Law will be able to replace this lost revenue.
Here are some of the deceptive practices that Lexington Law telemarketers were accused of:
• Claiming to be from a government agency or credit bureau
• Claiming that the consumer had a serious problem with their credit report
• Guaranteeing that the company could improve the consumer's credit score
• Charging upfront fees for services that were not actually provided
Was Lexington Law even a law firm?
No, Lexington Law did not practice law on behalf of customers. The company is a credit repair company, and its services are limited to disputing inaccurate information on credit reports, negotiating with creditors, and providing educational resources.
The company does not have the legal authority to represent consumers in court or to provide legal advice. If a customer needs legal help, Lexington Law would supposedly refer them to an attorney.
The CFPB's complaint against Lexington Law alleged that the company had made false and misleading statements about its legal capabilities. For example, the company's website stated that it was "a law firm that specializes in credit repair" and that it had "a team of experienced attorneys who will fight for your rights." However, the company is not a law firm and its employees are not attorneys.
*The settlement with the CFPB requires Lexington Law to stop making these false and misleading statements. The company is also prohibited from using the term "attorney" or "law firm" in its marketing materials.
What to do if you've been burned by Lexington Law?
If you had a no-kidding inaccuracy on your credit report (like if you have been a victim of credit identity theft), use the form right here on this page to get in touch with a REAL credit reporting law firm (I tell people, "we don't send letters - we send lawsuits!") so we can sort your issue out!
