Lexington Law is a consumer advocacy law firm that offers credit-repair services to its clients. As part of its services, the firm consults with its clients on how to challenge entries that the clients believe are incorrectly included in their credit reports, which are called negative “tradelines”.  The firm sends letters on their clients’ behalves to data furnishers, such as CBE Group and RGS Financial, contesting the negative tradelines. The letters are formatted using one of several templates generated by Progrexion that incorporates digital copies of the clients’ signatures. Lexington Law does not identify itself as the sender of the letters. But an engagement agreement, which customers must sign before engaging the firm’s services, notifies prospective clients that “communications sent by Lexington to data furnishers and credit bureaus on your behalf will be sent in your name, and will not be identified as being sent by Lexington.” Elsewhere the agreement provides Lexington Law with the ability to sign and send communications on behalf of clients and in their names that “verify and/or challenge the accuracy of the clients’ credit reports.”  As early as 2010 and 2012, CBE Group and RGS Financial, respectively, began to question whether letters that they had received disputing negative tradelines and purporting to be from consumers had in fact been sent by the consumers themselves. In July 2017, CBE Group filed a lawsuit which claimed that Lexington Law committed fraud by sending dispute letters purporting to be from consumers. In a nutshell, Plaintiffs contend that Defendants run a nationwide fraudulent credit-repair scheme, preying on financially troubled consumers by drafting, signing, and mailing frivolous dispute correspondences – all using Progrexion’s patented software that generates context-based unique letters – in the name of consumers, without the consumer’s specific knowledge or consent, and without identifying that the letters are from a law firm, rather than a consumer. Plaintiffs averred that they suffered damages because of the law firm’s conduct since, under the Fair Credit Reporting Act and the Fair Debt Collection Practices Act, they must investigate a challenge to a negative tradeline when a consumer, rather than a law firm, sends a dispute letter.  The law firm did not file any dispositive motions until the close of evidence at trial, when they filed for judgment as a matter of law, which the district court deferred, pending the jury’s verdict. The jury found for the plaintiffs against the law firms on their fraud claims, and awarded compensatory and punitive damages in excess of $1 million.  After trial, the law firm renewed its motion for judgment as a matter of law, which the district court granted.  And the U.S. Fifth Circuit affirmed.

“The district court concluded that Defendants did not make any false representations (material or otherwise) when signing and sending the dispute letters because Lexington Law had the legal right to sign its clients’ names on the correspondence it sent on their behalf to data furnishers who reported inaccurate information about the clients’ credit. Indeed, Lexington Law’s engagement agreement provided the firm with the ability to sign and send letters on the clients’ behalves and in their names. Under Texas law, it is well settled that the attorney-client relationship is an agency relationship; the attorney’s acts and omissions within the scope of his or her employment are regarded as the client’s acts. Given this principle, Texas courts have repeatedly upheld settlement agreements signed by attorneys on behalf of their clients. While this case does not involve a settlement agreement, the principle stated in R.B. has persuasive value here….

“Rather than cite to any case law illustrating Defendants’ conduct amounts to fraud, Plaintiffs argue that the conduct undermines the FCRA and the FDCPA. But Plaintiffs did not bring claims under those statutes. Hence, the two cases upon which Plaintiffs rely in support of their argument are inapposite and arguably undercut the claims they do in fact assert here. Both Warner and Turner involved consumers who claimed that Experian, a consumer reporting agency, violated their rights under the FCRA by not investigating dispute letters sent by Go Clean Credit, a credit-repair organization, on their behalves. As indicated above, the FCRA mandates that a credit-reporting agency investigate dispute letters when those letters are sent by the consumers themselves.  The Warner and Turner courts concluded that Experian was not required by federal law to investigate Go Clean Credit’s dispute letters since the FCRA only mandates that credit-reporting agencies respond to dispute letters sent ‘directly’ by the consumer. Applied here, these cases suggest that Plaintiffs did not have a statutory obligation to investigate the correspondence Lexington Law sent on its clients’ behalves and in their names; they do not imply that the firm made any misrepresentations when it sent the letters.

“Moreover, to the extent Warner and Turner indicate that Plaintiffs were not required to investigate the dispute letters, those cases also suggest that Plaintiffs did not justifiably rely on any representations Lexington Law may have made. Before the time period during which Plaintiffs claim they were injured by Defendants’ fraudulent conduct, Plaintiffs began to question whether the dispute letters had in fact been sent by consumers themselves. For, witnesses from each plaintiff testified that the letters looked ‘similar’ as indicated by the ‘verbiage,’ ‘stamps,’ and envelope formatting. CBE Group reviewed the letters and concluded that ‘all of the letters were coming from the same place and … they were not written … by consumers.’ RGS Financial also reviewed the letters and determined that ‘they weren’t directly sent by consumers….’ Once Plaintiffs developed suspicions that the letters may not have been sent from consumers themselves, they incurred costs in investigating correspondence on their own accord.


CBE Group v. Lexington Law Firm, 993 F.3d 346 (5th Cir. 2021).