5th Circuit Sides with Lexington Law: Affirms Decision Vacating $2.5MM Award to Debt Collectors; Finds Letters are Not Fraud

Accounts receivable entities which are inundated by seemingly auto-generated dispute letters have been paying close attention to the case filed by CBE Group, Inc. (CBE) and RGS Financial, Inc. (RGS) against Lexington Law (Lexington) and Progrexion, Inc. What at first seemed like a significant win for entities being flooded with these letters has seemingly ended with the opposite result.

Here's a recap of the saga: in 2017, after years of receiving massive amounts of letters with consumer signatures that appeared to be auto-generated and not sent from the actual consumers themselves, CBE and RGS filed a lawsuit against Lexington and Progrexion. The suit alleged Lexington and Progrexion (as Lexington's agent) committed fraud by making the letters appear to be from consumers when the letters were actually sent by Lexington on templates created by Progrexion. In July 2019, a jury returned a verdict awarding a total of 2.5 million dollars in actual and punitive damages to CBE and RGS, finding that the practice amounted to fraud, including by failing to disclose material facts.

What happened after the verdict?

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