Credit Repair

CFPB Sues Lexington Law – KBLAM!

Written by Steve Rhode

The Consumer Financial Protection Bureau (Bureau) today filed a complaint against PGX Holdings Inc. and subsidiaries Progrexion Marketing Inc., Progrexion Teleservices Inc., eFolks LLC, and CreditRepair.com Inc.; and against John C. Heath, Attorney at Law PLLC, which does business as Lexington Law.

The lawsuit, filed in U.S. district court in Utah, alleges the defendants violated the Telemarketing Sales Rule (TSR) by requesting and receiving payment of prohibited upfront fees for their credit repair services.

Under the rule, companies can only charge fees for telemarketed credit repair services after providing consumers with documentation reflecting that the promised results have been achieved. That documentation cannot be provided to consumers until more than six months after the results were achieved.

The Bureau also alleges that Progrexion and its subsidiaries violated the TSR and the Consumer Financial Protection Act by making deceptive representations in its marketing, or by substantially assisting others in doing so.

The Complaint

The 48-page complaint alleges the companies engaged in the following:

  • To generate credit repair sales, Defendants rely on a network of marketing affiliates who advertise a variety of products and services, often related to consumer credit products. As alleged below, Progrexion’s marketing affiliates have used deceptive, bait advertising to generate referrals to Lexington Law’s credit repair service. For example, one of Progrexion’s most productive marketing affiliates falsely advertised that it “guarantee[d] ANYONE a 0-3.5% Down Home Loan no matter how bad their Credit is when we start!” In reality, the affiliate did not provide any loans at all. Interested consumers were told that, to participate in the (non-existent) loan program, they had to sign up with Lexington Law. The Progrexion Defendants paid this marketing affiliate for each credit repair sale that resulted from its efforts, despite knowing that it engaged in deceptive practices.
  • The Hotswap Partners also pitch Lexington Law’s and CreditRepair.com’s credit repair services, typically after telling the consumer that he or she has been denied a particular credit product or service, offering the consumer unfavorable terms on a loan, or telling the consumer that he or she will be eligible for the product or service, or for better terms on the product, if they first enroll in the credit repair service.
  • Hotswap Partners have used advertisements that included fake real estate ads, fake rent-to-own housing opportunities, fake relationships with lenders, false credit guarantees, and false and unsubstantiated statements about past consumer outcomes. The ads have also included false and unsubstantiated statements about consumers’ likelihood of success in obtaining products and services such as rent-to- own housing contracts, mortgages, or personal loans.
  • In August 2016, a consumer filed a complaint with the Bureau claiming that the same marketing affiliate discussed in Paragraph 107 represented that “after enrollment with Lexington Law I was guaranteed a loan.” The Bureau forwarded the complaint to Heath PLLC, who replied to the Bureau and the consumer that it had “no knowledge” of the affiliate. Despite it being one of the “largest Hotswap Partners” sending consumers to Lexington Law, and despite Progrexion’s prior knowledge of similar guarantee claims, Heath PLLC claimed that the consumer “appears to have constructed a relationship between us and [the marketing affiliate]…that we are unaware of.” Heath PLLC further stated that it could not “take responsibility for the alleged representations that may or may not have been made to this person” by the marketing affiliate.
READ  Should I Keep Paying Lexington Law Firm to Repair My Credit?

The CFPB states, “The Telemarketing Sales Rule states that fees for telemarketed “goods or services represented to remove derogatory information from, or improve, a person’s credit history, credit record, or credit rating” cannot be charged until the time frame in which the seller has represented all of the goods or services will be provided to that person has expired and the seller has provided the person with documentation in the form of a consumer report from a consumer reporting agency demonstrating that the promised results have been achieved, such report having been issued more than six months after the results were achieved. At the time of enrollment with Lexington Law or CreditRepair.com, Progrexion charges consumers a fee, which has been between $9.99 and $14.99 since July 2011, for a complete copy of their TransUnion credit report.”

Additionally, “After enrolling with Lexington Law or CreditRepair.com, consumers are then charged their first credit repair service work fee, typically $99.95, five to fifteen days after enrollment.”

“Consumers are then charged ongoing monthly fees by Progrexion and Heath PLLC for their credit repair services of $79.95 to $129.95, depending on the service level the consumer chooses.”

You can read the full complaint online here.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

3 Comments

  • Lexington was paid $119.00 per month for over a year. Four months after cancelling service w Lexington, I compared their services with the actual Credit companies, Experian etc. Items of concern that Lexington stated were taken care of had not been taken care of with the individual credit companies. I have contacted Lexington with the situation. Lexington has inform me, I must re-enroll into their program before they can help me. I explained that sounds like you want me to pay twice for service that Lexington has previously stated was taken care of.
    So now I have paid all this money to Lexington and the actual credit firms have not updated my Credit reports per the updates that Lexington sent to me.
    Very frustrating to pay for a service, and not receive what has been
    stated. I feel like I have wasted over $1,000.

    • It could just be that Lexington disputed the items and they were removed. But what I’ve seen happen in the past is they will get added back the next time a creditor dumps data again to the credit bureau. Getting it removed from the credit report isn’t the primary goal, because it can always be added back and collected on even if it does not appear on the credit report.

      Many consumers are not happy with the reality that a credit report should contain a true and factual listing of credit activity, both the good and the bad. The target is accuracy and not trying to clear the reports of things which may be accurate but negative.

      This misperception of credit reports causes many people to pay for services that ultimately turn out differently than expected.

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