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National Consumer Law Center’s Work to Protect Low-Income Consumers Featured in Visionaries Documentary

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For Immediate Release: MAY 29, 2019

Contact: Jan Kruse, National Consumer Law Center, jkruse@nclc.org or
(617) 542-8010

Award-winning Series Profiles Boston-based Nonprofit Fighting to Protect Vulnerable Families Striving to Live the American Dream

BOSTON – The work of the National Consumer Law Center (NCLC) is profiled in the upcoming season of Visionaries, the award-winning public television series hosted by acclaimed actor Sam Waterston of the Netflix original series Grace and Frankie and formerly of HBO’s The Newsroom and Law & Order. Episode 11 of the series’ 23rd season, now available to PBS stations across the country, profiles NCLC attorneys and its civil legal-aid partners on location in Atlanta, Boston, Detroit, and Washington, DC as they work to protect low-income families from wrongful eviction, foreclosure, and other unfair and deceptive consumer abuses. The clients featured in the episode are emblematic of a larger American story of insecure housing; of Davids taking on corporate Goliaths; and of the principle that equal justice under the law is a fundamental right of all citizens.

“The documentary captures the heart and soul of advocates in the trenches fighting against long odds to protect consumers and keep at-risk families in their homes, and it embodies our vision of a nation in which everyone benefits from economic fairness, security, and justice,” said Richard Dubois, executive director of the National Consumer Law Center. “We were thrilled that the Visionaries team selected NCLC and our network of civil legal-aid partners across the nation to be profiled in this long-running series.”

Visionaries’ latest season take viewers around the world to experience the lives of extraordinary people tackling some of humanity’s toughest challenges. The producers chose to highlight advocacy surrounding consumer justice and economic security for vulnerable families by showcasing the work of the NCLC.

To view the 30-minute episode, stream/download it HERE.



Andrea Bopp Stark – Attorney

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Andrea Bopp Stark is a staff attorney at the National Consumer Law Center Boston office focusing on writing and teaching about fair debt collection practices and mortgage servicing issues. Andrea is also involved in advocating for foreclosure prevention and fair debt collection policies on the state and federal level. Andrea is a contributing author to NCLC’s Fair Debt Collection, Home Foreclosures, and Mortgage Servicing and Loan Modifications legal manuals. Previously, Andrea was a partner at Molleur Law Office in Biddeford, ME, and worked as an attorney for Northeast Legal Aid in Lawrence, Massachusetts where she was one of NCLC’s first recipients of the John G. Brooks fellowship. Andrea holds a B.A. from the University of Vermont and obtained her JD and Masters of Social Work from Boston College. She is admitted to practice law in Massachusetts, Maine, and New Hampshire.



Installment Loan APR Rates in Southern States: Fact Sheets

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Elijah Peterson, Donor Engagement Manager

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Elijah is responsible for engaging and informing new and existing supporters of the NCLC’s work via email, social media, and other communications channels. Previously, he was a grant writer at the International OCD Foundation, a development officer at Capital Good Fund in RI, and a labor organizer for a hotel and food service workers union. Elijah received his B.A. in Psychology from Brown University.



In Comprehensive Official Comment Letter, Broad Coalition Rebukes Trump-appointed CFPB Director’s Plan to Gut Payday Loan Rule

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FOR IMMEDIATE RELEASE: May 17, 2019

National Consumer Law Center contacts: Lauren Saunders (lsaunders@nclc.org) or (202) 595-7845; or Jan Kruse (jkruse@nclc.org) or (617) 542-8010

CFPB is required to consider comments on its plan, which would eliminate protections from 300% APR payday loan debt traps

House Oversight and Reform subcommittee hearing held on the proposal

WASHINGTON, D.C. – The National Consumer Law Center (NCLC), as part of a coalition of civil rights, consumer, and labor groups, submitted an official comment letter (link to executive summary) to the Consumer Financial Protection Bureau (CFPB), excoriating CFPB Director Kathy Kraninger’s plan to gut a 2017 CFPB rule that was issued to stop payday loan debt traps. The coalition’s comment letter, submitted on the last day of the comment period, is a comprehensive rebuttal to Kraninger’s rationale for rolling back the Payday Rule. The letter shows how her proposal fails to account for ample evidence of consumer harm of these 300%+ APR loans and abandons the CFPB’s core mission. Select quotes from the comment are included below. More than 420 community, civil rights, and consumer groups across the nation sent a separate comment letter opposing the CFPB’s proposed changes.

The proposal would rip out the heart of the 2017 payday rule–the commonsense requirement that a lender must check to see if a borrower can repay a loan before issuing it (an “ability-to-repay” standard).

Along with NCLC, signatories to the letter are: Center for Responsible Lending, Public Citizen, Consumer Federation of America, American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), Americans for Financial Reform Education Fund, Leadership Conference on Civil and Human Rights, League of United Latin American Citizens (LULAC), NAACP, National Association for Latino Community Asset Builders, National Coalition for Asian Pacific American Community Development (National CAPACD), and U.S. PIRG.

The comment letter states:

“The Bureau spent over five years engaging in extensive information gathering, public input and analysis before finalizing a rule to address the unfair and abusive practice by payday and vehicle title lenders of making loans without considering ability to repay….

“The Proposal—a plainly outcome-driven, 47-page exercise in grasping for straws—has offered no reasonable basis to rescind that Rule.

“The Proposal never disputes the harms of the debt trap. But the Proposal, without basis, would permit those harms to continue. Payday and title lenders’ practice of making loans without considering ability to repay causes serious and widespread harm. Payday and vehicle title lenders turn responsible lending on its head, creating a debt trap by design that is the core element of their business model. The overwhelming majority of payday and auto vehicle loans are made to borrowers caught in a debt trap because they cannot afford to repay their loans on their initial terms….

“And lenders’ unfair and abusive practice causes particular harm to financially vulnerable communities, including older Americans, those on a fixed income, and communities of color….

“The Proposal abandons the Bureau’s core statutory mission of protecting consumers and shows an almost exclusive focus on the interests of payday and vehicle title lenders.”

Linked here is map showing the APR of a typical payday loan in those states without strong interest rate caps.

A House Oversight and Reform subcommittee held a hearing yesterday entitled “CFPB’s Role in Empowering Predatory Lenders: Examining the Proposed Repeal of the Payday Lending Rule.”



Racial Justice and Equal Economic Opportunity Archives

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Credit & Economic Opportunity

Policy Analysis

Policy Briefs, Reports & Press Releases

Comments, Letters, & Testimony

Litigation & Amicus Briefs

  • American Insurance Association v. U. S. Department of Housing and Urban Development, Case No. 1:13-cv-00966-RJL (D.D.C.) NCLC joined an amicus brief drafted by the NAACP Legal Defense and Educational Fund and the American Civil Liberties Union, also joined by the National Community Reinvestment Coalition, in support of the defendant’s motion to dismiss or, in the alternative, for summary judgment in this case challenging HUD’s Discriminatory Effects Rule under the Fair Housing Act. (2/20/2014)
  • Township of Mount Holly, New Jersey v. Mt. Holly Gardens Citizens in Action, Inc., U.S. Supreme Court, No. 11-1507
    NCLC and ACLU filed an amicus brief, joined by seven other advocacy groups, supporting the respondents’ position that the U.S. Court of Appeals for the Third Circuit decided correctly in ruling that the Fair Housing Act authorizes disparate impact civil rights claims as a means to combat housing discrimination.
  • Beverly Adkins et al. v Morgan Stanley: NCLC is co-counsel for African American plaintiffs in a landmark lawsuit brought against Morgan Stanley. The lawsuit claims that the Defendant violated federal civil rights laws, the Fair Housing Act and the Equal Credit Opportunity Act as well as state laws by adopting mortgage securitization policies that caused predatory lending and adversely impacted African Americans in the Detroit, Michigan area.
  • Subprime Mortgage Discrimination: National class action cases brought under the Fair Housing Act and the Equal Credit Opportunity Act against certain subprime mortgage lenders.
  • Auto Finance Discrimination: NCLC served as co-counsel in national class-action cases brought under the Equal Credit Opportunity Act against certain auto finance companies and banks. The lawsuits, which exposed practices that had operated secretly for over 75 years and had resulted in higher-interest-rate car loans for African Americans and Hispanics, have transformed car financing practices across the industry.
  • Magner v. Gallaher, U.S. Supreme Court No.1032
  • NCLC has joined an amicus brief prepared by the Lawyers’ Committee for Civil Rights Under Law with other national civil rights organizations arguing that the Fair Housing Act properly is interpreted to authorize disparate impact claims and that the Eight Circuit applied the correct burden-shifting approach to litigating disparate impact claims consistent with the way Title VII cases are litigated and HUD’s proposed regulation governing this subject. Brief. NCLC also consulted with the ACLU (which cites NCLC’s Credit Discrimination manual and references NCLC’s sub-prime mortgage discrimination disparate impact cases brought under the Fair Housing Act) and the Department of Justice with regards to the preparation of the amicus briefs they separately prepared and filed with the Supreme Court in the appeal. Briefs.

 

Equal Access to Higher Education

Policy Briefs, Reports & Press Releases

Letters

Litigation

Webinars

Why is America’s Racial Wealth Gap Growing?, sponsored by the Insight Center and PolicyLink, March 6, 2013. NCLC attorney Deanne Loonin addresses equal access to higher education.

 

Sustainable Homeownership

Policy Analysis
Policy Briefs, Reports and Press Releases

Comments

Letters

Litigation & Amicus Briefs

  • Action against discriminatory targeting of African-American consumers for abusive credit terms in home purchases.
    Horne et al v. Harbour Portfolio et al.     Second Amended Complaint (N.D. GA)
    Horne et al v. Harbour Portfolio et al.     Third Amended Complaint (N.D. GA)
    Opposition to Defendant Harbour’s Motion to Dismiss Second Amended Complaint
    Opposition to Defendant NAA’s Motion to Dismiss Second Amended Complaint
    Order on Motion to Dismiss Second Amended Complaint (N.D. GA)

    Horne v. Harbour Portfolio    , Unites States District Court for the Northern District of Georgia: Suit was brought by the Atlanta Legal Aid Society on behalf of 22 African-American residents representing 16 household. The action asserted claims of discriminatory targeting for abusive credit terms in home purchase “contract for deed” transactions extended by Harbour Portfolio. The complaint alleged that Harbour Portfolio, through both intentional targeting of African-American consumers and practices that have a foreseeable disparate impact on African-American consumers, violated the Fair Housing Act of 1968, as amended, 42 U.S.C. § 3601, et seq., the Equal Credit Opportunity Act, 15 U.S.C. § 1691, et seq., and the Georgia Fair Housing Act, O.C.G.A. § 8-3-200 et seq. NCLC subsequently joined the case as plaintiffs’ co-counsel.On March 20, 3018, the Court denied a motion to dismiss for all but one of the claims asserted (wrongful eviction). Thereafter, during on-going discovery, including subpoenas issued to Fannie Mae, requests for production of documents by the defendants and depositions of the defendant principal, the parties engaged in mediation before a U.S. Magistrate Judge.The case settled in December, 2018. The 12 households who were still living in their homes received a deed converting their contract for deed to a mortgage with title insurance, reduced interest rates, shorter repayment terms and, in some cases, principal reductions. They also received a lump sum cash payment. The four households who were evicted/no longer living in the home received separate lump sum cash payments. As part of the settlement, separate attorneys’ fees were paid to plaintiffs’ counsel of record. (More information on land installment contracts including NCLC’s 2016 report, Toxic Transactions: How Land Installment Contracts Once Again Threaten Communities of Color, here)
  • Connecticut Fair Housing Center, Inc. vs Liberty Bank Case No. 18-1654 || Press Releaseand Complaint
    The National Consumer Law Center and and the Connecticut Fair Housing Center filed a fair housing lawsuit in the United States District Court for the District of Connecticut against Liberty Bank, alleging that Liberty Bank violated the Fair Housing Act by: engaging in a pattern and practice of redlining communities where most of the residents are racial and ethnic minorities; discriminating against African – American and Latinx mortgage applicants and; discouraging African – American and Latinx mortgage applicants from applying for credit. Press Release and Settlement Agreement.
  • National Fair Housing Alliance (NFHA) v. HUD, Amicus brief || Appendix A
    The case seeks to protect HUD’s 2015 Affirmatively Furthering Fair Housing Rule.
  • Bank of America, et al v. City of Miami (United States Supreme Court, 2016). The NCLC, along with the American Civil Liberties Union, the Impact Fund, the Lawyers’ Committee for Civil Rights, the Leadership Conference on Civil and Human Rights, the National Fair Housing Alliance, and the Poverty & Race Research Action Council, filed an amicus brief supporting the standing of the City of Miami to assert discrimination claims against Bank of America and Wells Fargo under the Fair Housing Act (FHA). The brief argues that standing under the FHA extends to municipalities not directly targeted by discrimination. Noting that racially discriminatory lending practices are a major cause of this country’s residential segregation, the brief asserts that the FHA was designed to address the systemic problems associated with such segregation and to permit cities to seek redress for injuries caused by discriminatory practices.
  • Property Casualty Insurers Assoc. of America v. Donovan (N.D. Ill. 2014). The NCLC, along with 12 civil rights and grassroots organizations, filed an amicus brief in an action brought by the insurance industry challenging a rule formalized by HUD in 2013 that recognized disparate impact liability under the Fair Housing Act. The insurance industry sought to invalidate the rule’s application to the homeowner’s insurance industry. Examining the history and persistence of insurance redlining, the organizations argued that application of the rule is vital to ensuring fairness in the market for homeowner’s insurance and is consistent with sound actuarial practices, and other business related practices.
    Decision: The U.S. District Court, Northern District of Illinois decision dismissed the industry’s claim under McCarran-Ferguson for lack of subject matter jurisdiction as that claim was not ripe for judicial review and also rejected the industry’s challenge to HUD’s adoption, in the rule, of a three-step burden-shifting approach. However, the court did determine that HUD did not adequately consider substantive comments submitted by the industry prior to adoption of the rule and remanded the case to HUD to provide further reasoned explanations of the rule’s impact under McCarran-Ferguson, the filed-rate doctrine, and its general effects on the insurance industry.American Insurance Assoc. v. U.S. Department of Housing and Urban Dev. (D.C. 2014). The NCLC joined the NAACP Legal Defense and Educational Fund, American Civil Liberties Union (ACLU), and the National Community Reinvestment Coalition in an amicus brief in support of HUD in an action brought by homeowner’s insurance associations seeking to invalidate the agency’s issuance of a rule which codified its long-standing interpretation that the Fair Housing Act prohibits disparate impact discrimination. Noting the history and persistence of insurance redlining, NCLC argued that this pre-enforcement challenge to the rule should be dismissed on jurisdictional grounds without reaching the merits.
  • Beverly Adkins et al. v Morgan Stanley: NCLC is co-counsel for African American plaintiffs in a landmark lawsuit brought against Morgan Stanley. The lawsuit claims that the Defendant violated federal civil rights laws, the Fair Housing Act and the Equal Credit Opportunity Act as well as state laws by adopting mortgage securitization policies that caused predatory lending and adversely impacted African Americans in the Detroit, Michigan area.
    • The Adkins v. Morgan Stanley lawsuit asserts that Morgan Stanley pursued mortgage securitization policies and practices that, through their funding of now-defunct mortgage lender New Century Mortgage Company, resulted in a significant discriminatory impact on African-American borrowers in the Detroit metropolitan area, flooding the already highly segregated community with toxic, combined-risk subprime loans in the lead-up to the collapse of the housing market in 2008. Read the expert reports submitted in support of the reverse red-lining allegations made in the case and NCLC’s issue brief detailing key findings by the experts.
      NCLC Issue Brief
      Ayers Expert Report
      McCoy Expert Report
      Oliver Expert Report
      Segrue Expert Report
  • Subprime Mortgage Discrimination: National class action cases brought under the Fair Housing Act and the Equal Credit Opportunity Act against certain subprime mortgage lenders
  • Magner v. Gallaher, U.S. Supreme Court No.1032
    NCLC has joined an amicus brief prepared by the Lawyers’ Committee for Civil Rights Under Law with other national civil rights organizations arguing that the Fair Housing Act properly is interpreted to authorize disparate impact claims and that the Eight Circuit applied the correct burden-shifting approach to litigating disparate impact claims consistent with the way Title VII cases are litigated and HUD’s proposed regulation governing this subject. Brief. NCLC also consulted with the ACLU (which cites NCLC’s Credit Discrimination manual and references NCLC’s sub-prime mortgage discrimination disparate impact cases brought under the Fair Housing Act) and the Department of Justice with regards to the preparation of the amicus briefs they separately prepared and filed with the Supreme Court in the appeal. Briefs.

 

Equitable Access to Broadband, Media, and Telecom Services

Policy Analysis

Comments, Letters, & Testimony



The Truth about Credit Reports & Credit Repair Companies

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(Chinese, Korean, Russian, Spanish and Vietnamese)

What Should I Look for in My Report?

You should look for the following possible problems:

Are There Any Errors?

If you think there is an error, like an account that is not yours, you should fill out a dispute form or write a letter explaining the problem. Attach copies of any supporting evidence, if you have it. Make sure to send the form or letter to the attention of the agencies that issued the reports containing the error.

The agency must then investigate your report and get back to you, usually within thirty days. (They can decline your request only if they decide that it is frivolous. They must notify you of this decision). The agency must notify you within five days of completing the investigation and must include a copy of your credit report, if it has been revised. If the agency does fix the error, order another report in a few months to make sure the error stays fixed.

Is There Any Old Information?

Look for:

  • Credit information older than seven years
  • Bankruptcy information older than 10 years

This is considered “old” information and should no longer be in your report.

It is Important to Keep Track of Your Credit History by Ordering Your Report

There are three major credit reporting agencies and many other small ones. You should order your report from at least the “Big Three.” These companies are:

EQUIFAX / EXPERIAN / TRANS UNION

Consumers are entitled to a free annual credit report from each major credit bureau. You can also obtain a free report if:

  • You have been denied credit within the past 60 days.
  • You are unemployed and will be applying for a job within the next 60 days
  • You receive public assistance, or
  • You have reason to believe that your report contains inaccurate information due to fraud.

Victims of identity theft also have rights to free reports. These agencies may charge you for additional reports during the year.

How Do I Order My Report?

You can order your report by phone, on-line, or by mail. To order by phone call toll-free 877-322-8228; online, click on www.annualcreditreport.com; or complete the Annual Credit Report Request Form (available on the above website) and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can also get your report by sending a written request which includes your full name, date of birth, social security number and residences for the past five years.

Will This Solve All of My Credit Problems?

No. Sometimes people get into trouble with credit. The problems will usually show up on your report. The best thing to do in this situation is to start rebuilding your credit. And if you apply for new credit, shop carefully. Try to get the best terms possible.

What if I Fix Everything and I’m Still Turned Down for Credit?

It is possible that you are being illegally discriminated against. It is against the law for creditors to base decisions to extend or deny credit on sex, age, race, color, religion, national origin, marital status, receipt of public income or assistance or the exercising of your rights under consumer protection laws. You should consult an attorney immediately if you think this has happened to you.

Where Can I Go for Help?

Consult your local legal services office, volunteer lawyers project (often coordinated through the local bar association), or local department of consumer affairs.

A credit report is a record of how you have borrowed and repaid debts. Creditors usually look at this report to decide whether or not to grant credit and how much to charge.

What Kind of Information Can be Included in My Report?

Most commonly:

  • Identification and employment data
  • Payment history on your accounts
  • A listing of all creditors who have recently requested copies of your report
  • Public record information [such as bankruptcies, foreclosures, court judgments]

Credit reports sometimes include credit scores. A credit score is a number, usually from 300 to 850. The higher the number, the better. Creditors use these scores to help them evaluate the risk of lending to you and to decide how much to charge for credit. You may request a credit score from credit reporting agencies, but you may have to pay for it, depending on the type of transaction involved.

Who Can See My Credit Report?

Only certain people are allowed to look at your report, such as:

  • Creditors, when you apply for credit or for a loan.
  • Employers, but only under certain circumstances and most times you must give them written authorization.
  • Government agencies, including those trying to collect child support.

Should I Use a Credit Repair Company for Help?

NO! There are many things you can do on your own for free to “fix” your credit or to rebuild your credit.

Beware of These Common Claims Made by Credit Repair Companies

> Myth: “Credit repair companies can erase bad credit.”
> Fact: The truth is that no one can erase bad credit information from your report, if it is accurate.

> Myth: “Only a credit repair company can remove old or inaccurate information.”
> Fact: The truth is that if there are legitimate errors on your report or old information, you can correct the report yourself for free.

  • “Legitimate error” means that the information is inaccurate, not just that it is information you don’t like.
  • “Old information” means credit information older than 7 years, or bankruptcy information older than 10 years.

> Myth: “The bad information on your report is accurate, but a credit repair company can erase it anyway.”
> Fact: The truth is that if this means lying to the credit reporting agency, it is illegal.

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Consumer Watchdog’s Proposed Debt Collection Rule Bites Consumers: Authorizes Harassment by Debt Collectors

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FOR IMMEDIATE RELEASE: May 7, 2019
National Consumer Law Center contact: Jan Kruse (jkruse@nclc.org) or (617) 542-8010

Consumer Watchdog’s Proposed Debt Collection Rule Bites Consumers: Authorizes Harassment by Debt Collectors

Washington – The Consumer Financial Protection Bureau (CFPB) released a proposed debt collection rule today which provides numerous gifts to debt collectors with limited new protections for consumers.

“We are horrified that the CFPB’s proposed rule will actually authorize harassment of consumers through phone calls, emails, and texts. We are deeply disappointed that the CFPB failed to use this opportunity to protect consumers,” said Margot Saunders, an attorney at the National Consumer Law Center.

“Seven calls per debt, per week is simply too many, especially when combined with unlimited emails and texts,” said April Kuehnhoff, an attorney at the National Consumer Law Center who focuses on debt collection. “A student with eight loans could receive 56 calls per week. The proposed rule would also allow for critical notice to consumers to be provided by email or text message without a consumer’s consent as required by federal law. Other emails and text messages have no limits unless the consumer opts out.”

“Debt collectors could leave messages on voicemail that may not be private,” added Kuehnhoff. “And protections from time-barred “zombie” debts would be limited to prohibiting lawsuits and threats of suits on such debts, meaning that the consumer will face continued collection attempts out of court. Consumers will not understand that lawsuits are prohibited or that small payments may, in some states, open the consumer up to being sued.”

“And the proposed rule allows critical notices to be sent by email to consumers who may not have regular internet access,” noted Saunders. “The cell phones used by many low-income consumers do not provide the ready email access or ample data that wealthier people enjoy. They may not be able to use their phones to read emails, open attachments, and click on hyperlinks to see critical disclosures.”

Contact with a debt collector is a common experience for Americans. In 2017, 71 million Americans – nearly one in three adults with a credit report – had a debt in collection reported on their credit reports. Nationally, the percent of people with debt in collection reaches 45% for residents of predominantly non-white zip codes.

Abuses by debt collectors are consistently among the top consumer complaints to both the CFPB and the FTC. In 2018, there were 475,517 consumer complaints about debt collection compiled by the Federal Trade Commission. In 2017, the top categories of law violations in debt collection complaints collected by the FTC included “Calls After Getting ‘Stop Calling’ Notice” (227,917 complaints), “Calls Repeatedly” (210,238 complaints), “Makes False Representation about Debt” (192,704 complaints), “Fails to Identify as Debt Collector” (84,364), “Tells Someone Else About Consumer’s Debt” (39,760 complaints), and “Falsely Threatens Illegal or Unintended Act” (31,519 complaints).

NCLC’s Key Recommendations to Strengthen the Rule and Rein in Abuses

  • Stop telephone harassment by limiting collectors to one conversation per week (with up to three attempted calls per collector).
  • Only permit e-mail and text communications after a consumer has affirmatively opted-in to this method of communication, especially for the delivery of critical disclosures.
  • Protect consumer privacy by not exempting any collector contacts from the Fair Debt Collection Practices Act and clarifying that collectors cannot leave messages with employers, friends, or neighbors.
  • Stop collection of zombie debt by prohibiting collection, both in and out of court, of time-barred debt that is too old to be legally sued on.

The public will have 90 days to submit comments on the proposed rule after it is published in the Federal Register.

Related Resources

For more information on NCLC’s extensive body of work on fair debt collection, see https://www.nclc.org/issues/debt-collection.html and CFPB debt collection rulemaking: https://www.nclc.org/issues/debt-collection-rulemaking-at-the-cfpb.html



Advocates Applaud CFPB for Suing Firms Accused of Illegally Taking Upfront Fees for Credit Repair Services

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FOR IMMEDIATE RELEASE: May 3, 2019

CONTACT: National Consumer Law Center: Andrew Pizor (apizor@nclc.org) or Stephen Rouzer (srouzer@nclc.org) (202) 595-7847

Advocates Applaud CFPB for Suing Firms Accused of Illegally Taking Upfront Fees for Credit Repair Services

WASHINGTON– Advocates at the National Consumer Law Center applaud the Consumer Financial Protection Bureau’s (CFPB) legal action against Lexington Law and several internet-based marketers (PGX Holdings Inc. and subsidiaries Progrexion Marketing Inc., Progrexion Teleservices Inc., eFolks LLC, and CreditRepair.com Inc.).

In a lawsuit filed on Thursday in the U.S. District Court in Utah, the Bureau alleges the firms violated the Telemarketing Sales Rule (TSR) by requesting and receiving payment of prohibited upfront fees for their credit repair services. The law requires firms to provide consumers with documentation proving the promised results have been achieved prior to charging fees.

“The involvement of a law firm in this scam is particularly disturbing,” said National Consumer Law Center attorney Andrew Pizor. “We urge state regulators and bar associations to renew their attention to scammers using law firms as a front for misconduct.”

The Bureau also alleges some of the defendants violated the TSR and the Consumer Financial Protection Act by “making deceptive representations in its marketing, or by substantially assisting others in doing so.”

“The Bureau’s suit is a welcome step and we encourage it to seek strong penalties and restitution for any consumers harmed,” said Pizor. “Anything less could be dismissed by these scammers as a cost of doing business.”

“Consumers should never pay for credit repair–it’s a waste of money,” Pizor added. “You can get a free credit report and can fix errors yourself by going to annualcreditreport.com. Unfortunately, nothing but time can cure accurate negative information.”

For more information about fixing credit report problems, go to https://www.nclc.org/for-consumers/brochures-for-older-consumers.html#for_consumers