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A Deep Dive into the CFPB’s Suit Against Lexington Law Targeting the Credit Repair Organization’s Marketing Practices

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Credit repair organizations (CROs) have been flooding debt collectors with questionable mass disputes for a while now. One CRO—Lexington Law and its related entities (collectively, Lexington Law)—have caught the attention of the Consumer Financial Protection Bureau (CFPB or Bureau). On Thursday, the CFPB announced that it filed a lawsuit against Lexington Law for violations of the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act.

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According to the 48-page complaint, Lexington Law relied on a marketing affiliate network that “used deceptive, bait advertising to generate referrals to Lexington Law’s credit repair service.” The Bureau focused on Lexington Law’s referral fees, stating that the organizations failed to observe the mandatory waiting period required by federal law. As summarized in the complaint, “fees can only be collected after a certain period has elapsed and it has been demonstrated that the promised results have been achieved.”

The complaint seeks an injunction against Lexington Law and its affiliates, the rescission or reformation of consumer contracts, refunds to consumers of monies paid, disgorgement for unjust enrichment, and payment of damages.

Lexington Law’s Lead Generation Program

The complaint provides a glimpse into how Lexington Law generates its large customer volume. Allegedly, the company uses a network of affiliates to generate its “massive quantities of leads.” The affiliates use telemarketing campaigns to market certain financial products (rent-to-own housing, mortgage, auto loans, or personal loans) and, when they get a consumer on the phone, they live-transfer the consumer to Lexington Law. This is called a “hotswap.”

The complaint states:

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.

Some of the scripts that Lexington Law provided its hotswap affiliates include a statement that Lexington Law’s services “can just make the whole process of getting this loan funded easier,” and that “[Y]ou just need to get a few things taken care of with your credit in order to get qualified for a loan…that is exactly what Lexington specializes in.”

Editor’s Note: In April, a federal court compelled Lexington Law to produce its client communications related to lead generation for its mass credit dispute letters in a lawsuit filed by Ad Astra Recovery Services, Inc.

Misrepresentations by Hotswap Affiliates

The issue with Lexington Law’s lead generation program is that its hotswap affiliates gained their leads through misrepresentation, such as offering “illusory products or services” that the company did not actually offer and advertising “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.”

One of Lexington Law’s largest lead generation affiliates would tell consumers on the phone that “their credit score was the only thing keeping them from their desired product.” This would follow with a lead-in to Lexington Law’s service to help increase the consumer’s eligibility for a product that did not exist.

According to the complaint, Lexington Law had knowledge that such misrepresentations were occurring and allowed the practices to continue.

insideARM Perspective

For quite some time, collection agencies and creditors have raised flags about practices of certain CROs that seemed to be harmful to consumers. Until now, regulators had not taken action.

With this complaint, the tides have turned. Some may be disappointed that the CFPB did not go further and target Lexington Law’s mass credit disputes; however, what the Bureau targeted could in fact help to alleviate that issue. Without its massive (and, according to the Bureau’s complaint, deceptive) lead generation program, Lexington’s source for these mass credit report disputes would not exist at its current scale.

There is also a question of whether Lexington Law’s business model can survive if the court sides with the Bureau on this matter. In addition to the high dollar value of the relief requested by the Bureau, the allegations themselves would require a big change in the way Lexington Law receives payment from consumers—specifically, following a waiting period and demonstrating that the company did what it promised.

It’s too early to tell what effect this lawsuit will have on the ARM industry, but one thing is for certain: all eyes are on this one.



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Dustin Aab on the importance of achieving financial freedom in life | Personal Finance News

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The more closely we look around us, the more we get nearer to reality where so many individuals work with a certain grit, commitment and dedication to achieve what their hearts desire. These individuals are the ones that not only work to attain their set goals in their career but also help others in their journeys. Talking about the sales and consulting business, which is growing each passing day across nations as professionals from various industries aim to get nearer their visions and aspirations in business, we can notice the boom in this niche; thanks to professional entrepreneurs like Dustin Aab.

Based out of California, Dustin Aab is a leading American entrepreneur, who excels in sales and consulting and has been shaping the careers of hundreds of people through his astute skills and knowledge as a true professional in the industry. It was seven years ago that Dustin Aab had started his career in the sales arena and from the past six years owns his sales company, under which he is working with the mission to turn the desires and dreams of professionals into reality through his mentorship and coaching in sales.

Dustin Aab’s sales and consulting business is all about providing the best of the industry products and services that help individuals change their financial status and situation. His life has been full of challenges, but Dustin Aab very early had realized the power of working hard and putting in every possible effort to make a successful career; hence, after working so hard for years, he has been able to create the financial freedom he wanted by becoming an entrepreneur. He hopes to change as many lives as he can in his career and take people nearer to their definition of success. He does sales mentorship and consulting for not just individuals, but companies as well.

Some of the specific services he offers through his company include Real estate, amazon automation, sales training mentorship, credit repair, Instagram growth and branding, life insurance and solar.

(Disclaimer: This is a Brand Desk content)

 

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Home Depot, Inc. (The) (NYSE:HD), J P Morgan Chase & Co (NYSE:JPM) – Key Markets To Watch As The Mortgage Boom Continues To Fade

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The last year has seen the most eye-popping spike in value in history. 

While the Covid 19 pandemic initially shut down economies across the globe, the Work from Home movement caused a mass exodus away from metropolitan areas where many large companies are headquartered.  Homebuyers have been laying siege on the housing market to the point where houses in the most desirable locations are selling for more than 50% above the asking price in some cases.

This current trend is all thanks to the Fed lowering interest rates last year in response to the pandemic to help bolster the economy. 

Lowering the interest rate allows banks to charge less interest on consumer mortgages.  When mortgages are cheaper, it may entice would-be home buyers to jump on opportunities, but it also gives current homeowners the ability to re-finance (re-fi) and pocket the cash to use elsewhere.  While this was the intended response, the side effects of cheap access to money led to an immense spike in demand for mortgages.

Regarding the demand for houses from new home buyers, there is a potential for the steam to run out of this drive because buyers are being priced out of opportunities. This is partly due to the massive supply and demand imbalance and partly due to raw materials for new houses such as lumber adding so much to the price of a new house, which eventually dissuades buyers away from the market.

The mortgage markets, however, are also running out of steam.  It can be inferred from the earnings call from Rocket Companies, Inc. (NYSE: RKT) that the mortgage market is experiencing a price war that, while temporary, is weighing on profits.  Mortgage companies are continually fighting to provide consumers with better rates, but this competition can only last for so long.

Whether you’re invested in the mortgage companies, real estate, or are simply an interested home buyer, here are some recommendations of markets to follow to find out if the steam does run out and a correction occurs in the housing market.

Mortgage Writers Rejoice

Mortgage companies like Rocket Companies, owner of Quicken Loans, North American Savings Bank (OTC: NASB), and Chase Bank (NYSE: JPM) saw massive profits during 2020 and early parts of 2021 as the demand for mortgages skyrocketed.  They expanded services, increased employee pay, and saw growth like they hadn’t seen since before the financial crisis in 2008. 

While banks generally learned their lesson the last time around, this time is different.  Back in 2008, the methods used by banks to get people to sign on the dotted lines were sometimes less than savory.  This led to a sharp rise in risky mortgages that eventually led to waves of defaults that the financial system wasn’t prepared to handle.

This time, the consumers have run at banks with their money and demanded mortgages.  On top of this, the mortgages being written are for individuals who meet lenders’ requirements.  According to this credit repair report, companies are more sophisticated now as well, and they are helping even more people get good rates and adding to the numbers flocking to mortgage companies.

However, the world is emerging from life during Covid, and the mortgage companies will be the ones to show the first signs of a cooling market.  It may have already started, as mentioned before during Rocket Companies, Inc.’s earnings call. 

The Luxuries of Home Improvement

Amazon will indeed rule the world if it can ever pose a threat to home improvement giants like Home Depot (NYSE: HD) and Lowe’s (NYSE: LOW). 

While both companies certainly specialize in retail home improvement supply, the bulk of their business is from commercial sales in contractor supplies.  If you’ve ever tried to go to a Home Depot or Lowe’s on a Saturday morning, you’ve seen the lines of contractor trucks pulling through the bay to pick up cords of PVC, lumber, and other materials.  These items are not easy to ship. All the better for the continued legacy of both of these companies.

The consistent profits for Home Depot and Lowe’s over the last year have largely been fueled by both the new home market and the refinance market.  New homes depend on raw materials to build, and if the market for new homes begins to cool, Home Depot and Lowe’s will be the stocks to watch.  However, the new home sales market tends to lag behind existing home sales since new homes are often built by large development companies as inventory before they are sold to home buyers.

To a much larger degree, home improvement projects have seen massive growth due to homeowners refinancing their mortgages and using the savings to build upon home values.  This may represent the bulk of the correlation between home improvement stocks and the mortgage market.  While the home improvement market is expected to rise in the coming years, a fall in revenues could point to a cooling in refinance applications.

Summing Up

The mortgage market relies on bringing customers to the table to sign papers. 

However, there are only so many willing buyers, and most of them have been drawn out over the last year for a variety of reasons including the Work from Home movement, extra savings built up due to lockdowns, and historically low interest rates. 

While business has been good, the world emerging from the current crisis may signal a cooling in the housing market, though not to the extent of the 2008 financial crisis. Keeping track of mortgage writing and home improvement companies may provide an idea of where the sentiment lies and allow investors to prepare for changing markets in the near future.

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Way to Realizing Fiscal Freedom With Fix It Financial

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The overwhelming rise in employment levels has resulted in a significant alteration in lifestyle choices made by the working class. People are leaving their sustenance zone and are aiming to satisfy themselves with various services available. But to make the situation conducive, we need easy access to funds and investments which can help people realize their dream lifestyle, or even help small businesses to work on the expansion of their company. The market is filled with people who claim to provide a fruitful result, but their services are often fraudulent and inconsequential.

Also Read | Tamil Nadu Finance Minister Palanivel Thiagarajan Says Innovative Measures Needed To Correct State’s Finances

Fix it financial is a credit repair company that helps people improve their financial standing by implementing various tools. The objective remains, building credit score by removing all the unwanted negative items from the 3 major Credit bureaus by disputing negative items in public information. Unlike the traditional methods to tackle the problem, Fix it financial, present a new approach to people’s falling credibility and targets the core issues to secure them back.

An outline of the credit score of multiple selves demonstrated a startling truth about the declining credit scores of people. The circumstances are bothering as it generates an enormous discrepancy between people in terms of loan accessibility. Keeping the same in their mind, Fix it financial ensures total transparency, and authentic results. They believe customer satisfaction should be the top priority of the firm, and hence they have strived hard to maintain their quality service without charging monthly fees.

Also Read | Excelling Beyond Boundaries To Help People With Specialized Financial and Investment Advice Is Stephen Rodrigues

Fix it financial was born when the promoter themself realized their steeping credit score. In order to improve it, they tried numerous methods which proved to be worthless. One must understand the whole concept so that they can decipher the trick to maneuver their desirable credit score. After discerning the same and trying out numerous methods, they were able to successfully change their credit score.

When asked about the values which make Fix it financial, a unique platform, they said, they try hard to create an ambiance of familiarity and peace., while treating each client and employee as a member of the family. Moreover, Fix it financial expresses their concerns over the people who are reluctant to invest but desire quick results. According to them, one cannot make profits if they are unwilling to put something into the business during the initial period.

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