The agency said the payments are the largest distribution ever from the CFPB’s Victim Relief Fund, which is financed by civil fines paid by companies that violate consumer protection laws.
According to the federal agency, checks will be mailed in the coming weeks to 4.3 million consumers who were charged illegal advance fees or who were allegedly targeted by fraudulent ads, creditrepair.com and its affiliates. The parent companies, according to the federal agency.
The CFPB won a legal ruling against credit repair businesses in August 2023, with a district court ruling the companies violated a law that requires such companies to wait at least six months after their promised results. Prohibits collection of fees.
The companies then filed for Chapter 11 bankruptcy protection. RulerClose to 80% of their business operations, including telemarketing call centers, have closed.
“Exploited Vulnerable Users”
“Lexington Law and CreditRepair.com exploited vulnerable consumers who were trying to rebuild their credit, and charged them illegal junk fees that they provided,” CFPB Director Rohit Chopra said in a news release. Didn’t.” release. “This historic distribution of $1.8 billion demonstrates the CFPB’s commitment to making consumers whole, even when companies that hurt them close or declare bankruptcy.”
Since its inception in 2011, the CFPB has awarded more than $3.3 billion to consumers who have been victimized by a range of illegal practices, such as student loan and mortgage relief scams and predatory lending. to give The Victims’ Relief Fund allows the CFPB to provide financial relief in cases where directed compensation from the infringing company is not possible.
The brainchild of Sen. Elizabeth Warren, D-Massachusetts, the CFPB was established after the 2008 financial crisis. Funded by the Federal Reserve, the agency has faced several legal challenges from opponents. The Supreme Court Maintained in May Its funding structure, which was challenged by the payday lending industry.
Still, the agency’s efforts may prove short-lived amid calls from some Republicans to weaken the agency or get rid of it altogether. On Wednesday, billionaire Elon Musk — among those nominated by President-elect Donald Trump In front of an attempt Calling for the elimination of the CFPB – to eliminate government bureaucracy, reduce regulations and cut government spending; Post on social media that “there are too many fake regulatory agencies.”
When will refund checks be sent?
Payments will be sent between December and January to eligible customers who have been harmed by the companies, and eligible individuals do not need to take any action to receive a check.
Those who believe they are eligible but have not received payment by mid-January can contact the JND Legal Administration at www.cfpb-lexlaw.org. Details about the distribution can be found here. Here.
How big will the payments be?
CFPB said Payments are based on a pro rata share of the fees paid by customers to CreditRepair.com and Lexington Law, but that payments may not cover all of the fees charged to them.
If the payments were split evenly, each person would receive about $419.
“If funds remain after distribution is complete, additional checks may be sent to customers who cashed their initial check. You do not need to take any additional action,” the agency said.
Can I file a claim?
No, according to the agency. “There will be no opportunities to file claims for this redressal case,” it said.
Is a refund check taxable?
The CFPB said that’s unlikely, because the checks are considered refunds for payments consumers made to credit repair companies rather than taxable income. “If you have tax-related questions, however, please contact a tax advisor,” he added.