(RightIsRight.co) – In a bombshell development, the Consumer Financial Protection Bureau (CFPB) is set to distribute a staggering $1.8 billion in refunds to over 4 million Americans who fell victim to credit repair scams.
The CFPB is a controversial agency created after the 2008 financial crisis. It targeted credit repair giants Lexington Law and CreditRepair.com for engaging in deceptive practices and charging illegal fees.
These companies violated the Telemarketing Sales Rule by charging upfront fees before providing any services, a practice that the law explicitly prohibits.
The refund process is set to begin in December and continue through January. The CFPB says eligible consumers will receive checks averaging around $435 per person without further action.
If any funds remain, additional checks could be made in the future. These payments are likely non-taxable as they are refunds for services never received, but Americans are encouraged to seek professional tax advice.
CFPB Director Rohit Chopra said, “Lexington Law and CreditRepair.com exploited vulnerable consumers who were trying to rebuild their credit, charging them illegal junk fees for results they hadn’t delivered.”
“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 added.
The legal judgment against Lexington Law and CreditRepair.com mandated the massive payout and imposed a harsh ten-year ban on telemarketing.
Both companies have been forced to file for Chapter 11 bankruptcy, significantly reducing their operations.
Although the CFPB celebrates its fund redistribution, conservatives have criticized the agency since its creation.
Republicans and influential figures like Elon Musk have called for dismantling the CFPB, arguing that its regulatory authority is excessive and potentially unconstitutional.
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