These Companies Harvested $2.7 Billion in Illegal Fees
Then declared bankruptcy when they got caught
First, let’s just be clear: You do NOT need a credit repair company.
You can do most credit repair work yourself FOR FREE.
That’s what makes this story so insidious.
America’s two largest credit repair brands (affiliated companies) Lexington Law and CreditRepair.com were just fined $2.7 billion by the Consumer Financial Protection Bureau (CFPB).
Their crime? Harvesting fees illegally from customers in violation of the Telemarketing Sales Rule.
That is, it is illegal to collect money for credit repair services until six months AFTER negative items have been removed from a customer’s credit report. These companies were using telemarketing to solicit customers and collect fees in advance.
$2.7 billion worth of illegal fees.
Now, they’ve declared bankruptcy and may only have limited funds to pay impacted customers.
It is possible that the CFPB’s victim relief fund will provide some relief to customers.
The news about Lexington Law and CreditRepair.com comes after another so-called credit repair firm, Burlington Financial Group, was fined $30 million for a similar violation of the law.
Of course, the Lexington Law/CreditRepair.com scam makes that look tiny by comparison.
Here’s the deal: You can do most credit repair work yourself. For free.
Here are some steps to take:
“You should always be checking your credit report,” said Chi Chi Wu, staff attorney at the National Consumer Law Center.
The reports are available through AnnualCreditReport.com.
You can and should file a dispute if there are errors.
“We generally recommend that you mail a dispute through certified mail,” NCLC’s Wu said.
Include documentation showing that the debt was satisfied, she said. It should go to both the credit reporting firms and the debt collector. (Here’s a sample letter from the FTC for disputing errors on credit reports.)
You can also freeze your credit to prevent fraud. It can be unfrozen any time you are seeking new credit (buying a car or house, for example) and refrozen once the transaction is complete. This will prevent new accounts from being opened up in your name without you knowing it.
And for legitimate debt on your credit report, especially debt that has gone into collection, the only thing you can do to “repair” your score is pay or settle the debt and wait.
As you build a record of on-time payments and reduce your total debt load, your score will improve.
But there’s not a credit repair firm out there than can make time go any faster.