Note: Central Bonded Collectors is not a credit repair company, but a Third Party Collection agency and we follow the Consumer Financial Protection Act (CFPB), the Fair Debt Collection Practices Act (FDCPA), the Consumer Protection Act (CAA) and the Washington State Fair Debt Collection Practices Act (RCW 19.16.100).

CFPB Alleges Large Credit Repair Companies Violated Consumer Laws

The bureau’s lawsuit claims the companies harmed consumers through deceptive marketing practices and charging exorbitant fees.

The Consumer Financial Protection Bureau took a major step toward eliminating predatory practices from the credit and collection space by filing a lawsuit Thursday against defendants operating two of the largest credit repair companies in the United States.

In the suit filed by the CFPB in the U.S. District Court for the District of Utah on May 2, Lexington Law, and various affiliates, face accusations of engaging in ongoing, unlawful and predatory credit repair practices that harmed consumers nationwide.  According to the complaint, the defendants violated multiple consumer protection statutes, including the Consumer Financial Protection Act (CFPA) and the Telemarketing Sales Rule (TSR), by charging consumers unlawful advance fees in connection with credit repair services and by marketing and telemarketing those services through deceptive representations.

“Some of these predatory companies market their services through telemarketing and various media outreach channels to connect with the most vulnerable consumers, giving them false hope that their credit can be magically repaired with the swipe of a pen or excessive payments that do little – if anything — to improve credit scores,” said ACA International CEO Mark Neeb. “ACA International applauds the CFPB’s efforts to stop these companies from misleading and preying on consumers who struggle with financial freedom and to remove bad actors of all varieties from the credit and collection space.”

Under the TSR, companies are only permitted to charge fees for telemarketed credit repair services after providing consumers with documentation reflecting that the results promised to those consumers have been achieved. That documentation cannot be provided to consumers until more than six months after the results were achieved. The bureau alleges that the defendants violated the TSR and the CFPA by making deceptive representations in their marketing, or by substantially assisting others in doing so.

The CFPB’s complaint states that consumers signed up for the defendants’ credit repair services and paid hundreds of dollars in fees seeking to improve their credit scores and get better access to credit products, on better terms. To generate credit repair sales, the defendants relied on a network of marketing affiliates who advertised a variety of products and services, often related to consumer credit products, according to the complaint.  The CFPB alleges that the marketing affiliates used deceptive, bait advertising to generate referrals to Lexington Law’s credit repair service.

The defendants named in the lawsuit include PGX Holdings Inc. and subsidiaries Progrexion Marketing Inc., Progrexion Teleservices Inc., eFolks LLC, and Inc.; and John C. Heath, Attorney at Law PLLC, which does business as Lexington Law.

In addition to the bureau’s lawsuit against Lexington Law and Progrexion for engaging in deceptive acts and practices disguised as “fixing” consumers’ credit, the same consumer law firm and credit repair company are also the subject of a federal class action initiated by two ACA International members in the Northern District of Texas.  In the case of The CBE Group, Inc. and RGS Financial, Inc. v. Lexington Law Firm and Progrexion, Inc., No. 17-02594 (N.D.Tx), the ACA member collection agencies allege that Lexington Law and Progrexion have engaged in an ongoing fraudulent scheme of transmitting hundreds or thousands of frivolous dispute correspondence purportedly from consumers but drafted, signed, and sent by the consumer law firm and credit repair company without the specific knowledge and consent of the consumer.  Based on Lexington Law and Progrexion’s alleged unlawful, overt acts that have caused great harm and expense to the collection agencies, The CBE Group and RGS Financial have sought judicial relief by bringing claims against these seemingly bad actors for fraud, fraud of nondisclosure, tortious interference with existing contracts with creditors, tortious interference with prospective relations and conspiracy. 

For several years now, ACA members have reported receiving uninformative and frivolous generic form “dispute” letters, which are frequently disguised as originating from consumers, but actually mailed in bulk by consumer law firms or credit repair companies, like Lexington Law and Progrexion.  These organizations often send multiple letters disputing information on a consumer’s credit report even though they know the information is accurate.  These organizations employ this tactic because they hope industry participants who furnish credit information will either delete all of the consumer’s trade lines or report them as “disputed” even if there is no basis for the dispute.  Alternatively, their goal is to flood collection agencies with invalid or “bogus” disputes to try to get a dispute to “fall through the cracks,” hoping the data furnisher will not respond.  As a consequence, the credit information provider is often targeted with a Fair Debt Collection Practices Act lawsuit essentially “manufactured” by the credit repair organization or consumer attorney. 

Given that Lexington Law and Progrexion’s alleged unlawful and deceptive actions harm not only ACA members, but also potentially harm consumers and creditors who rely on the accuracy of Credit Bureau Repository reporting in making decisions about consumers’ credit worthiness, ACA has supported its members in litigating their claims against these organizations by providing Industry Advancement Funds to help defray the cost of prosecution in The CBE Group, Inc. and RGS Financial, Inc. case. 

When there is concrete evidence of egregious and unlawful conduct by participants in the financial marketplace, ACA International supports regulators’ efforts to target those bad actors and safeguard consumer rights by removing  known violators from the industry. ACA has consistently worked with the CFPB and other regulators to help them better understand the complex issues that legitimate debt collectors face.  ACA takes great pride in providing a wide array of educational offerings and compliance products and services to legitimate debt collectors who operate lawfully, take consumer protection seriously and play a unique and much-needed role in our credit-based economy.

ACA International will continue to monitor the CFPB’s lawsuit, along with The CBE Group and RGS Financial’s lawsuit against Lexington Law and Progrexion, and will provide periodic updates about both cases to members.

This communication is from a debt collector.  This is an attempt to collect a debt.  Any information obtained will be used for that purpose.