Our main protagonist in today’s story is Lexington Law, the credit repair service company that is a part of the United States market share leaders and the official addressee of a class-action lawsuit for violating some consumer protection laws. This lawsuit accuses this company of false advertising and Practice of charging customers for services not rendered.
Removing Negative Information: Lexington Law Lawsuit
The class action lawsuit was filed in May 2022 through the U.S. District Court for the Central District of California. First, the plaintiffs claim that Lexington Law used false promises on how they could increase credit scores and delete unfavorable information from the credit reports of their clients. However, the services did not live up to expectations and fell short of achieving what was expected.
Specifically, the key allegations against Lexington Law include:
Falsely representing themselves as being able to erase, well, anything that consumers’ credit reports may contain “regardless of how adverse the contents of the report are.” Credit repair companies are prohibited by law from deleting negative information that is legitimate to delete.
Marketing them as a service that guarantees a full refund if your score did not increase, but denying customers refunds when the scores had not improved as advertised.
Misleading the customer with recurring monthly fee charges without their awareness under an automatically renewable service model. Here, some of the customers posted that they were billed for months or years after attempting to cancel.
Also, not writing dispute letters on consumer’s behalf as they demanded the removal of inaccurate or unverifiable information on credit reports. Such mishaps could harm outcomes more broadly because the service failed to deliver the promises made.
The plaintiffs maintain that these are unlawful and tantamount to frauds that infringe civil laws including the California False Advertising Law and Unfair Competition Law.
Potential Damages and Impact
As per the legal complaint filed by the consumer advocacy groups, Lexington Law damaged at least tens of thousands of consumers across the country through the alleged violations. The plaintiffs want to proceed with a class action complaint and certify the case as one that affects all the customers in the United States so that they may be awarded damages.
If the case advances as a class action and the plaintiffs prevail, onlookers argue that Lexington Law can be barred from practicing law and suffer damages and penalties over $100 million. The firm earned more than $80 million in revenues since 2021 and mainly received them from customer subscriptions.
An unfavorable ruling against Lexington Law might also affect other similar companies in the credit repair niche. As one of the biggest credit repair companies with a high reputation, what will happen to Lexington Laws’ legal case may set the tone for the enforcement strategies and potential legal actions against other actors in the market.
Lexington Law’s Response
In response to media requests about the lawsuit, Lexington Law provided this statement:
Lexington Law Firm has been providing credit repair services since 1991 and has worked with over 500,000 clients to improve their credit records. Lexington Law Firm has the best record of credit repair services It should be noted as a policy of the firm not to comment on any cases pending in court.
Despite not offering details about the lawsuit allegations, this statement makes Lexington Law assert that they have many customers and have been in business for many years for consumers to patronize them.
Controversies Surrounding Credit Repair
This new lawsuit filed against Lexington Law comes at the backdrop of rising governmental investigations at both federal and state levels into credit repair companies. Many consumers have reported to the credit repair industry with issues to do with the fact that outcomes for the service provided do not meet their expectations and daily issues with billing practices that catch customers with a monthly or yearly service paying for months or years without their knowledge.
While some are genuine companies extending useful services, there are also very many scams in this industry that will make lots of promises and take lots of money from consumers while they do not fix credit scores as they promised. It can be quite a task for a consumer to be in a position to differentiate between trustworthy and untrustworthy organizations.
From false and misleading advertising to billing consumers for services without their consent, and from failing to provide services that were promised, and more - the practices attributed to Lexington Law match some of the main concerns that federal overseers and consumer protection agencies seek to address when regulating credit repair services.
Ongoing Case Development
Consumers will need to keep an eye out for additional developments in the class action case against Lexington Law as the case moves through the legal system. The outcome could affect Lexington Law customers and may create new legal standards concerning the credit repair industry’s obligations to disclose information, calculate and charge reasonable fees for services, and fulfill contracted obligations.
Any judgment or settlement could also create procedural protections for Lexington Law customers who have been harmed to seek restitution or other forms of redress. In the case that consumers are in the process of deciding on which credit repair firms to hire, case news may give fresh information as to the credibility and performance of Lexington Law relative to other firms.
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