The complaint, filed on May 2 in Federal District Court in Utah, said people paid the credit repair companies hundreds of dollars in fees, seeking to improve their credit scores and get better access to loans on improved terms.
But the businesses used misleading methods, including false advertising, as “bait” to attract credit repair clients, the complaint said. Progrexion, for example, paid an affiliate that advertised nonexistent home loans with down payments as low as zero percent, even to borrowers with “bad” credit. Interested consumers were then required to enroll in credit repair services, through Lexington Law. “In reality,” the complaint said, “the affiliate did not provide any loans at all.”
The Consumer Financial Protection Bureau didn’t respond to a request for comment on its suit.
Eric M. Kamerath, a spokesman for Lexington Law and Progrexion, which includes CreditRepair.com, emailed a statement in response to a request for comment on the lawsuit: “Lexington and Progrexion have helped millions of consumers ensure their credit reports are fair, accurate and substantiated. We take the trust and confidence consumers place in us very seriously, we disagree with the allegations in the complaint, and we will vigorously defend ourselves and the valued services we provide.”
According to an analysis of the consumer bureau’s complaint database published this week by the U.S. PIRG Education Fund, complaints about credit reporting, credit repair services and other “personal consumer reports” made up 43 percent of total complaints in 2018, up from about a quarter of complaints in 2016.
Andrew Pizor, a lawyer with the National Consumer Law Center, said he welcomed the bureau’s lawsuit and warned that paying for credit repair is a waste of money.