The Consumer Financial Protection Bureau (CFPB) recently settled a nationwide credit repair scam that impacted over 4 million consumers who fell for the pitches they received from CreditRepair.com, Lexington Law and related companies and law firms. According to the CFPB, CreditRepair.com and Lexington Law are the two largest credit repair entities in the United States.
The CFPB settled the case with those charged for $2.7 billion. However, because the companies involved in the scams filed for bankruptcy, the CFPB is looking into ways that impacted consumers can be compensated by the CFPB’s own victims’ relief fund.
The approved settlement also includes a prohibition against the punished companies from telemarking for 10 years and a requirement that all impacted consumers receive a notice outlining their rights under the settlement.
The so-called credit repair companies got into trouble when they required consumers targeted by their telemarking tactics to pay fees up front for alleged credit repair work done by those companies. Federal law requires that before a consumer pays a credit repair company for services rendered, six months must pass and at that time, the consumer must be shown proof that the company delivered the results it promised to the consumer. The law is called the Telemarketing Sales Rule.
The Legal Services Plan advises its participants to steer clear of credit repair companies and scammers who claim that they can eliminate consumer credit problems. No company can remove accurate information from a credit report and any individual or company claiming otherwise should be avoided.
Plan participants can call (800) 482-7700 to have their credit reports reviewed by an attorney who will represent you to remove errors or negotiate a payment plan with creditors to pay off legitimate debts. The Plan also has educational webinars and E-Books available on protecting your credit and credit report repair on its website for Plan members to learn more about their rights and options.
By Georgi Bargamian