The Consumer Financial Protection Bureau said it is distributing $1.8 billion to 4.3 million former customers of a defunct credit-repair conglomerate, the largest-ever distribution from the bureau's victim-relief fund.
The CFPB obtained a $2.7 billion settlement with a number of credit-repair companies operating under a variety of brands, including Lexington Law and Creditrepair.com, last year. Prior to the settlement, a judge had found that the firms violated consumer-protection laws by taking advance fees through telemarketing, a violation of rules issued under the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994. The firms later declared bankruptcy after the settlement.
In a statement on the distribution Thursday, CFPB Director Rohit Chopra said the distribution is a reflection of the efforts the bureau has made to protect American consumers from "junk fees."
"Lexington Law and CreditRepair.com exploited vulnerable consumers who were trying to rebuild their credit, charging them illegal junk fees for results they hadn't delivered," Chopra said. "This historic distribution of $1.8 billion demonstrates the CFPB's commitment to making consumers whole, even when the companies that harm them shut down or declare bankruptcy."
Chopra has been a vociferous critic of junk fees — a term
