Lexington Law and CreditRepair.com: Accused of Telemarketing Sales Rule Violations
Introduction
Telemarketing is a marketing strategy used by businesses to reach potential customers over the phone. However, telemarketers often cross the line between being persuasive and becoming aggressive, leading to several complaints from consumers. To protect consumers from such harassment, the Federal Trade Commission (FTC) created the Telemarketing Sales Rule.
The Telemarketing Sales Rule (TSR) is a set of rules established in 1995 by the FTC to protect consumers from deceptive and abusive telemarketing practices. The rule applies to any person or company that makes or initiates telemarketing calls in interstate commerce.
It sets parameters on when these calls can be made, how they should be made, and what information should be conveyed during them. Violating any part of this rule can lead to significant penalties.
Brief Overview of Lexington Law and CreditRepair.com
Lexington Law and CreditRepair.com are two of the most well-known credit repair companies in the United States. They offer a range of services aimed at improving an individual’s credit score by removing inaccurate information from their credit report, disputing errors with creditors, negotiating settlements with debt collectors, and more. Lexington Law has been in business since 1991 and claims to have helped clients remove millions of negative items from their credit reports.
On their website, they state “Our lawyers help you get your life back on track through effective credit repair.” Similarly, CreditRepair.com advertises that it has helped over 500,000 customers improve their credit scores since its founding in 2012. These companies rely heavily on telemarketing as a means of acquiring customers.
They make unsolicited calls offering free consultations and promising quick solutions to credit problems. However, some of their tactics have raised concerns about whether they are complying with the Telemarketing Sales Rule.
Accused of Violating the Telemarketing Sales Rule
Despite their popularity, both Lexington Law and CreditRepair.com have been accused of violating the Telemarketing Sales Rule through their aggressive telemarketing tactics. Several consumers have filed complaints with the FTC about these companies’ behavior during these calls.
In this article, we will explore how these two companies operate and what specific violations they have been accused of committing. We will also examine the potential consequences for violating the TSR and what actions are being taken to address these issues.
Background on Lexington Law and CreditRepair.com
In order to understand the accusations against Lexington Law and CreditRepair.com, it’s important to first have a background understanding of both companies. Lexington Law was founded in 1991 and is headquartered in Salt Lake City, Utah. The company boasts a team of attorneys and paralegals who specialize in credit repair services.
According to their website, they provide personalized credit repair services, legal intervention on behalf of their clients, and credit education resources. CreditRepair.com was founded in 1997 as part of the Progrexion family of companies and is based out of West Valley City, Utah.
They also focus on credit repair services and claim to have helped over 2 million people with their credit scores. Their website offers similar services as Lexington Law but also includes access to a mobile app for tracking progress.
History and Mission Statements of Both Companies
The mission statement for Lexington Law reads: “At Lexington Law we work to ensure that every client’s credit report is fair, accurate, substantiated, and verifiable.” They aim to help their clients navigate the complicated process of repairing their credit reports so they can achieve financial freedom. CreditRepair.com’s mission statement is more focused on making the process easier for consumers: “Our goal at CreditRepair.com is simple: we want to help you tell your story so you can live your life.” They emphasize transparency throughout the process by giving clients access to tools for tracking progress every step of the way.
Services Offered by Both Companies
Both companies offer similar services including disputing inaccuracies on credit reports with creditors or bureaus, monitoring changes in scores over time through online dashboards or mobile apps, offering educational resources about how credit works or tips for maintaining good credit, and providing personalized advice based on individual credit reports. Lexington Law also offers additional services such as bankruptcy assistance, identity theft protection, and wills and trust services. CreditRepair.com offers a “Score Tracker” tool that allows customers to monitor their scores over time with customized alerts for changes.
Overview of Their Marketing Strategies
Both Lexington Law and CreditRepair.com have been criticized for their aggressive telemarketing tactics, which is the basis for the accusations regarding violations of the Telemarketing Sales Rule. They both heavily rely on cold-calling potential clients to advertise their services and offer “free consultations.” According to complaints filed with the FTC, many consumers have claimed that they were contacted multiple times despite requesting to be placed on the Do Not Call Registry or declining services. Some consumers allege that they were misled about fees or guarantees of results.
In addition to telemarketing, both companies have robust online presences with active social media accounts and blogs offering tips for improving credit scores or financial literacy. They also partner with other organizations like real estate agencies or mortgage lenders to offer co-branded promotions or discounts.
The Telemarketing Sales Rule
Explanation of the rule’s purpose and scope
The Telemarketing Sales Rule (TSR) is a set of regulations aimed at preventing abusive telemarketing practices. The rule was established by the Federal Trade Commission (FTC) in 1995 and applies to telemarketers selling goods or services via telephone. The purpose of the rule is to protect consumers from deceptive or unfair practices, while still allowing legitimate telemarketers to operate.
The TSR covers all types of telemarketing calls, including those made by for-profit companies, non-profit organizations, and political campaigns. However, it does not apply to calls made for purely informational purposes or calls made by a consumer in response to an advertisement.
Key provisions related to telemarketing calls
There are several key provisions outlined in the TSR that specifically relate to telemarketing calls: 1) Do Not Call Registry: The FTC maintains a national Do Not Call Registry that allows consumers to opt-out of receiving most telemarketing calls.
Telemarketers are required to maintain their own internal Do Not Call lists and must honor requests from consumers who do not wish to be contacted. 2) Abandoned Calls: This provision prohibits telemarketers from making repeated abandoned calls (i.e., hanging up after one ring).
Abandoned calls can be frustrating for consumers and can also tie up phone lines. 3) Caller ID requirements: Telemarketers must transmit accurate caller ID information so that consumers know who is calling them.
Additionally, they cannot use misleading or fake caller ID information. 4) Prohibition on misrepresentations: This provision prohibits telemarketers from using false or misleading statements during a call.
For example, they cannot claim that a product will cure a disease if it has not been proven to do so. Misrepresentations are a serious offense and can result in fines or legal action.
Overall, the key provisions of the TSR are designed to protect consumers from unwanted and deceptive telemarketing practices. It is important for both consumers and telemarketers to understand these regulations in order to stay compliant with the law.
Alleged Violations by Lexington Law and CreditRepair.com
Description of complaints filed against both companies with the Federal Trade Commission (FTC)
Over the years, both Lexington Law and CreditRepair.com have been the subject of numerous FTC complaints regarding their telemarketing practices. In recent years, there has been a significant increase in consumer complaints related to these companies’ aggressive marketing tactics.
Many consumers have reported receiving multiple calls per day from these companies, even after requesting to be placed on their Do Not Call lists. According to FTC records, many of these calls were made using pre-recorded messages or robocalls.
Some consumers also reported that they were misled by the telemarketers regarding the cost or effectiveness of the services offered by these credit repair companies. Additionally, some consumers claimed that they were not aware they had signed up for recurring monthly charges until unauthorized charges appeared on their credit cards.
Analysis of specific violations, including:
1) Failure to honor Do Not Call requests
Both Lexington Law and CreditRepair.com are required to maintain internal Do Not Call lists and honor any requests from consumers who do not wish to receive further marketing calls. However, according to FTC complaints filed against both companies, many consumers continue receiving calls even after requesting removal from their marketing lists.
The FCC and FTC have strict regulations for telemarketing practices in order to protect consumer privacy rights. According to law if a person request not be called again then a company must stop making any unwanted call within 30 days.
2) Making repeated or harassing calls
Numerous consumer complaints made against Lexington Law and CreditRepair.com included allegations that customers received multiple call attempts per day. It is considered harassment when someone intentionally annoys another person through repeated unwanted contact via phone or text message particularly when someone has requested not to be contacted. This is a violation of the TCPA (Telephone Consumer Protection Act) and the Telemarketing Sales Rule.
3) Misrepresenting services or fees
According to FTC records, some consumers felt misled by Lexington Law and CreditRepair.com regarding their services’ cost and benefits. Some telemarketers used deceptive sales practices or made false or misleading statements regarding what their credit repair services could do for a consumer’s credit score.
In some cases, consumers reported being charged significant upfront fees without receiving any beneficial service as promised by the marketing representatives. These practices are considered illegal under the Federal Trade Commission Act, which prohibits unfair or deceptive trade practices.
Consequences for Violating the Telemarketing Sales Rule
Penalties imposed by the FTC
The Federal Trade Commission (FTC) takes violations of the Telemarketing Sales Rule very seriously and has the power to impose significant penalties on companies found to be in violation. The FTC can impose fines of up to $43,280 per violation, which means that a company making multiple calls in violation of the rule could face millions of dollars in fines. In addition to these monetary penalties, the FTC can also issue cease and desist orders, which require companies to immediately stop engaging in certain practices or face additional fines.
The impact on consumers
The consequences of violating the Telemarketing Sales Rule are not just felt by companies – consumers can also be negatively affected. Receiving repeated or harassing phone calls from telemarketers can be incredibly frustrating and disruptive, particularly if those calls are made outside of normal business hours or at inconvenient times. Misrepresentations about services or fees can also lead consumers into signing up for services they do not need or cannot afford.
Conclusion
Lexington Law and CreditRepair.com have been accused of violating the Telemarketing Sales Rule through their aggressive telemarketing tactics. While it is important for individuals to take responsibility for managing their own credit scores and finances, it is equally important for companies like Lexington Law and CreditRepair.com to abide by federal regulations designed to protect consumers from predatory practices.
Through enforcement mechanisms like fines and cease-and-desist orders, regulators like the FTC play an important role in holding these companies accountable when they fail to do so. Ultimately, this helps ensure that consumers have access to fair and transparent credit repair services that truly benefit them over time.