(StraightShooterNews.com) – 4 million Americans who fell victim to misleading credit repair companies just scored a huge win as the Consumer Financial Protection Bureau (CFPB) is set to distribute a whopping $1.8 billion among them.
Credit repair giants Lexington Law and CreditRepair.com have been found guilty of charging illegal fees and failing to deliver promised services.
These companies marketed themselves as saviors for those struggling with poor credit but have been exposed as nothing more than wolves in sheep’s clothing.
Both companies preyed on vulnerable consumers desperate to improve their financial situations.
The CFPB’s action comes as part of the largest distribution from its victims relief fund, which is funded by civil penalties imposed on companies that violate consumer protection laws.
The court’s judgment against these credit repair firms was damning. They were found to have violated the Telemarketing Sales Rule by charging fees before providing services.
They were also hit with a staggering $2.7 billion penalty and a ten-year ban on telemarketing.
“The companies charged illegal junk fees for results they hadn’t delivered,” stated CFPB Director Rohit Chopra.
“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 continued.
The fallout from this scandal has been swift and severe. Both Lexington Law and CreditRepair.com have filed for Chapter 11 bankruptcy, effectively shuttering their operations.
For the 4.3 million eligible consumers, relief is on the way. Refund checks will be distributed between December and January, with an average payout of around $435 per person.
While this may not fully compensate for the stress and financial hardship endured, the refund has been labeled a step in the right direction toward justice.
Since its creation after the 2008 financial crisis, the CFPB has redistributed over $3.3 billion to harmed consumers.
Still, some Republicans and figures like Elon Musk are calling for dismantling the CFPB, arguing against its regulatory authority.
They assert that the agency has too much power and might be unconstitutional at its core.
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