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CFPB accuses two of the nation’s largest credit repair companies of tricking and cheating customers

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Two of the largest credit companies in the nation illegally charged customers for credit repair services and used deceptive advertising to trick and cheat consumers, the Consumer Financial Protection Bureau claims.

The CFPB this week filed a lawsuit against CreditRepair.com and Lexington Law, which the bureau claims are two of the country’s largest credit repair companies, alleging that the companies violated the Telemarketing Sales Rule by requesting and receiving payment of prohibited upfront fees for credit repair services.

The lawsuit also claims that the companies violated the Consumer Financial Protection Act by making false claims in its ads, or by “substantially assisting” others in doing so.

The lawsuit also names sever other companies, all of which are either related to or associated with the consumer-facing outlets CreditRepair.com and Lexington Law.

The CFPB lawsuit names PGX Holdings and subsidiaries Progrexion Marketing, Progrexion Teleservices, eFolks, and CreditRepair.com; and against John C. Heath, Attorney at Law, which does business as Lexington Law.

The companies’ relationships are complicated with different subsidiaries performing operations on behalf of other companies, and in the case of Lexington Law, Progrexion conducts most of Lexington Law’s core business operations, but Heath, operating as Lexington Law Firm, serves as the face of Lexington Law, according to the CFPB.

The companies also allegedly use each other as lead-generation outlets for credit repair services, and that, according to the CFPB, is where the issues begin.

“Defendants operate two of the largest credit repair companies in the country, Lexington Law and CreditRepair.com. They market their services through various media, including online and over the telephone, offering to help consumers remove negative information from their credit reports and improve their credit scores,” the CFPB said in its lawsuit.

“Consumers sign up for Defendants’ credit repair services and pay hundreds of dollars in fees seeking to improve their credit scores and get better access to credit products, on better terms,” the CFPB continued.

To generate business, the companies allegedly use a network of marketing affiliates that advertise a variety of products and services, often related to consumer credit products, the CFPB said.

But that advertising isn’t always on the up and up, the CFPB claims.

“Progrexion’s marketing affiliates have used deceptive, bait advertising to generate referrals to Lexington Law’s credit repair service,” the CFPB said.

In one example, one of Progrexion’s “most productive marketing affiliates falsely advertised” that it guaranteed “ANYONE a 0-3.5% Down Home Loan no matter how bad their Credit is when we start!”

But, according to the CFPB, the affiliate did not provide any loans at all. Rather, interested consumers were told that in order to participate in the (non-existent) loan program, they had to sign up with Lexington Law.

According to the CFPB, the Progrexion companies paid this marketing affiliate for each credit repair sale that resulted from its efforts, despite knowing that it engaged in deceptive practices.

Beyond that, the companies also allegedly violated the law by demanding and accepting payment upfront for certain credit repair activities.

As the CFPB states, federal law forbids requesting or receiving payment upfront for certain telemarketed credit repair services. Specifically, if a company offers services claiming to remove derogatory information from, or improve, a person’s credit history, credit record, or credit rating, fees can only be collected after a certain period of time has elapsed and it has been demonstrated that the promised results have been achieved.

But according to the CFPB, Progrexion companies charged consumers when they signed up for their credit repair services and on a monthly basis thereafter, ignoring the appropriate waiting period and without demonstrating that the promised results were achieved.

According to the CFPB, Progrexion makes most of its money by selling the credit repair services offered by Lexington Law.

And the company sells those services by working with “affiliates” that send business to the companies through several methods, including a “hotswap” call program.

Through this program, the Progrexion companies partner with companies that offer certain products such as rent-to-own housing contracts, mortgages, auto loans, or personal loans.

The affiliates market their loans through inbound and outbound calls. During those calls, the affiliates identify consumers who could potentially be in need of credit repair services.

While those people are still on the phone, their call is transferred from the affiliate to one of the Progrexion companies so the company may begin selling their credit repair services. This call transfer is called a “hotswap.”

According to the CFPB, the hotswaps usually happen directly after a caller has been denied a loan.

“The Hotswap Program is intended to convince consumers to purchase credit repair services when they have been denied a product or service they wanted,” the CFPB said. “According to Progrexion’s website, ‘This call-based program is so effective because it connects people to credit repair at the moment they’ve been denied credit.’”

According to the CFPB, a “significant amount” of the companies’ credit repair business is generated through these hotswaps.

In other instances, some of these affiliates used “advertisements that included 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,” along with “false and unsubstantiated statements about consumers’ likelihood of success in obtaining products and services such as rent-to-own housing contracts, mortgages, or personal loans,” as enticements to try to get consumers to call in.

In one case, one of Progrexion’s most prodigious lead sources was a company that supposedly offered low-interest mortgages, access to rent-to-own housing, and other products or services, but in reality did not provide any such products or services.

According to the CFPB, the company admitted that it simple acted as an “affiliate call center that transfers potential clients to Lexington Law.” The unnamed company was responsible for sending Progrexion more than 100,000 people who signed up for credit repair services over a five-year period.

 The CFPB is suing the Progrexion companies to stop them from “engaging in ongoing, unlawful practices that harm consumers nationwide by charging consumers unlawful advance fees in connection with credit repair services and by marketing and telemarketing those services through deceptive representations, and to obtain relief for consumers who were harmed by these practices.”

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California’s vague new financial regulation law

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California Capitol. Photo by Anne Wernikoff for CalMatters

In summary

California has a new financial regulation law but its reach is vague and awaits more definition.

Assembly Bill 1864 didn’t get much media or public attention as it zipped through both houses of the Legislature on the last day of the 2020 session.

Superficially, it appeared merely to reconfigure the state’s financial regulatory agencies into a new entity called the Department of Financial Protection and Innovation.

However, those in California’s vast financial industry were paying lots of attention because the bill creates an entirely new regulatory regime with broad powers, including fines of up to $1 million a day, to police financial players that hitherto have had little oversight.

The official rationale for the legislation is that President Donald Trump’s administration neutered the federal Dodd-Frank Wall Street Consumer Financial Protection Act of 2010, so the state must step in with an equivalent to guard against predatory financial practices that harm consumers.

The new California Consumer Financial Protection Law gives the reconstituted agency authority to go after “abusive practices” whose definition in the law is fairly vague. Thus, the agency itself will define the term as it also decides which businesses will face its scrutiny.

It appears that the new law will affect firms involved in debt settlement, credit repair, check cashing, rent-to-own contracts, payday lending, student loan servicing and financing for retail sales. However, its primary target seems to be financial services offered by non-banks, particularly what are called “fintech companies” that offer bank-like services via the Internet without maintaining physical offices.

Fintechs, many of them based in the San Francisco Bay Area, have blossomed in recent years as part of the digital economy, competing with traditional brick-and-mortar banks. Their disruptive nature is not unlike the challenge that technology-based ride services such as Uber and Lyft pose to taxicabs and buses.

Late-blooming changes in AB 1864 exempted traditional financial firms that are already regulated, such as banks and credit unions, from the new consumer protection law, leading some analysts to conclude that its unstated aim is to help them stave off competition from new kids on the financial block.

The vagueness of the new law was encapsulated in what Gov. Gavin Newsom said during a signing ceremony. The new law and the new department, he said, will “create conditions for innovation to flourish in a way where we can steward that and we can just work against its excesses. So we support risk-taking, not recklessness.”

Newsom also signed two other financial protection measures, one that requires debt collectors to be licensed beginning in 2022 and the other creating a Student Loan Borrower Bill of Rights.

Although the new state law is said to mirror the Dodd-Frank law, it contains at least one significant difference. When federal regulators levy fines for what they consider to be bad conduct, the money goes into the federal treasury. When state regulators impose their fines of up to $1 million a day, the money will be retained by the new agency to finance more activity.

Will that give the new agency a financial incentive to skip over minor consumer issues and go after big companies? It’s a question that only time will answer.

Significantly too, the new investigative and regulatory mechanism contained in AB 1864 specifically does not usurp the authority of the attorney general to also target companies under the state’s equally vague “unfair competition” law.

From its inception a decade ago, Dodd-Frank has attracted criticism from business executives for regulatory overkill. Will California’s new version be less controversial? We won’t know until the new agency puts some definitional meat on its bones.



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California’s vague new financial regulation law – Whittier Daily News

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Assembly Bill 1864 didn’t get much media or public attention as it zipped through both houses of the Legislature on the last day of the 2020 session.

Superficially, it appeared merely to reconfigure the state’s financial regulatory agencies into a new entity called the Department of Financial Protection and Innovation.

However, those in California’s vast financial industry were paying lots of attention because the bill creates an entirely new regulatory regime with broad powers, including fines of up to $1 million a day, to police financial players that hitherto have had little oversight.

The official rationale for the legislation is that President Donald Trump’s administration neutered the federal Dodd-Frank Wall Street Consumer Financial Protection Act of 2010, so the state must step in with an equivalent to guard against predatory financial practices that harm consumers.

The new California Consumer Financial Protection Law gives the reconstituted agency authority to go after “abusive practices” whose definition in the law is fairly vague. Thus, the agency itself will define the term as it also decides which businesses will face its scrutiny.

It appears that the new law will affect firms involved in debt settlement, credit repair, check cashing, rent-to-own contracts, payday lending, student loan servicing and financing for retail sales. However, its primary target seems to be financial services offered by non-banks, particularly what are called “fintech companies” that offer bank-like services via the Internet without maintaining physical offices.

Fintechs, many of them based in the San Francisco Bay Area, have blossomed in recent years as part of the digital economy, competing with traditional brick-and-mortar banks. Their disruptive nature is not unlike the challenge that technology-based ride services such as Uber and Lyft pose to taxicabs and buses.

Late-blooming changes in AB 1864 exempted traditional financial firms that are already regulated, such as banks and credit unions, from the new consumer protection law, leading some analysts to conclude that its unstated aim is to help them stave off competition from new kids on the financial block.

The vagueness of the new law was encapsulated in what Gov. Gavin Newsom said during a signing ceremony. The new law and the new department, he said, will “create conditions for innovation to flourish in a way where we can steward that and we can just work against its excesses. So we support risk-taking, not recklessness.”

Newsom also signed two other financial protection measures, one that requires debt collectors to be licensed beginning in 2022 and the other creating a Student Loan Borrower Bill of Rights.

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397 people register to vote on deadline day at Duval Supervisor of Elections – 104.5 WOKV

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JACKSONVILLE, Fla. — Monday, Oct. 5 at midnight, is the deadline to register to vote in Duval County.

But the Supervisor of Elections helped hundreds of people get registered today.

Robert Phillips, the chief elections officer of the Duval Supervisor of Elections, told Action News Jax’s Courtney Cole that 397 people came down to the Supervisor of Elections in downtown Jacksonville to get registered.

Supervisor of Elections staff assembled tents outside to allow people to register to vote without having to go through the COVID-19 prescreening necessary to enter the building.

“Again, 2020 has thrown us some challenges,” Phillips said.

There was even a little rain thrown into the mix today, but it didn’t stop folks from coming out.

“Out here, we have a lot of activity. We’ve been going since first thing this morning,” Phillips told Action News Jax.

There were people of all ages from all walks of life — some even registered for the very first time like Lemark Jamison.

Monday, Oct. 5, is a day he will always remember.

“It feels awesome, you know? It feels awesome,” Jamison told Cole.

Today, Jamison had the opportunity to register to vote for the first time in Florida.

“I’ve worked for voter registration companies. I’ve done advocating for Amendment 4, but I was never able to vote because of my prior background. But now I can,” Jamison said.

Jamison, the owner of a tax and credit repair business, told Cole his prior felony conviction held him back in the past.

In November 2018, more than 60% of Floridians voted to restore voting rights to more than 1 million people who completed their sentences.

But several months later, legislation was passed that required them to pay all financial penalties, which means thousands lost the right as quickly as they gained it.

“I’ve been contributing to society. I’ve been able to have several businesses. And I pay taxes. But I haven’t been able to, when it comes to voting, whether in a local level or any type of legislature — I haven’t been able to vote,” Jamison said.

The 35-year-old told Cole even though his wife helped him fill out his voter registration form — to which he exclaimed, “Thank God for wives, right?” — he told Cole it was pretty easy.

Now, he has this advice to share with other people who may be in his shoes:

“Get out and vote. Take advantage of this opportunity, regardless of who you plan on voting for.”

Here’s a breakdown from the Supervisor of Elections of how the 397 people registered today:

-56% registered as Democrats.

-21% registered as Republicans.

-22% registered as nonparty affiliates.



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