Consumer Credit Counseling Rip-Offs
The U.S. Federal Trade Commission has issued Alert Warnings about Consumer Credit Counseling
Services that are simply "Rip-Offs."� Here is testimony given by the FTC on Abuses of Credit
Counseling before the a Senate Committee.
Testimony Says that Some Firms Are Deceiving Consumers
Although credit counseling can provide financially distressed consumers
with valuable assistance, according to the Federal Trade Commission,
some firms may be misleading consumers about who they are, what they
do, or how much they charge. In Commission testimony submitted today
before the Senate Committee on Governmental Affairs, the Permanent
Subcommittee on Investigations,
FTC Commissioner Thomas Leary cautioned that some companies use their
non-profit status as a badge of trustworthiness to attract customers,
who are then duped into paying large fees. Those fees are sometimes
funneled to for-profit companies.
Leary explained that instead of teaching consumers about their finances
and how to manage debt as it promised, some credit counseling agencies
(CCAs) indiscriminately enroll their clients in "debt management plans"
(DMPs) without regard to their particular financial situation. This
kind of debt management - under which consumers pay debt managers who
then pay their creditors - can be beneficial for some consumers, but
not for all. "Along with these changes in the industry have come
complaints about troubling practices, including possible deception
about the services offered, poor administration of DMPs, and
undisclosed fees associated with DMPs," Leary said.
Leary stated that the FTC's greatest concern is deception by CCAs about
the nature and costs of their services, including the following
practices:
� Failure to pay creditors in a timely manner or at all. Some credit
counseling agencies that offer debt management plans may fail to pay
creditors in a timely fashion or at all. This can result in serious
consumer harm, such as late fees that the creditors impose. � Promises
of results that cannot be delivered. Some agencies promise that they
will lower consumers' interest rates, monthly payments, or overall debt
by an unrealistic amount. Some also make false promises to eliminate
accurate negative information from consumers' credit reports.
Material taken from the FTC.gov web site.
Here is a Credit Counseling Service complaint that one of my Worldwide
Internet Radio listeners called my show to explain and warn my
listeners about.
(Radio Listener) I signed an agreement with Consumer Credit Counseling Services of Ventura a
little over 2 years ago to solve my $20,000 dollar debt in Credit Cards
�
After complying with their instructions completely, I still owe $20,000
dollars and I am being sued by one of the Creditors. (I have had my
accounts looked at by an attorney that they had put me in touch with
through legal aide. Also, another attorney who deals with bankruptcies
and an accounting firm. Both have� stated the mishandling of these
accounts are just cause for legal action.
I have submitted complaints to the Better Business Bureau and the
Federal Trade Commission.� I have complied with their program
explicitly. Even when I have confronted them throughout the 2 years
concerning the billing cycle as to why my amounts where not decreasing,
I was told continuously that we process these billings in a proposal
format and submit it to the companies, and then they work-out
arrangements to get the billings reduced and the interest that
compounds.
� I started out with monthly payments of $491.00 dollars a month of
which I paid $494.00 dollars a month, and then I was asked to increase
my payments again, to $535.00 dollars a month last November.� At that
time I hesitantly complied with the request. (it was not our original
agreement, but I was told that it would pay my accounts off faster), I
was asked again around June of this year to increase my payments again
to over $640.00 dollars a month, with that and being laid off, I did
continue to pay $535.00 a month until July when my unemployment ran
out.� That's when I confronted them again that the amounts on my
accounts have not reduced.� The billing still shows I owe $20,000, of
which is what I started out owing 2 years ago, and now I am being
sued by the creditors.
�
They have used more excuses than I can count and are not willing to
work with me on any level except to say that now I should file for
bankruptcy, I could have done 2 years ago and saved $14,000 dollars,
but, I was trying to be responsible.� I have been harassed by the
Credit Card companies since the beginning of the program, morning and
night. When I would inform the Counselors they would instruct me to
tell them to call them and if that didn't work to call the Federal
Trade Commission.� I did send letters informing the Creditors of my
immediate situation and a letter to each expressing a cease-desist
letter.
8/10/04: I have talked with the Counselors recently, and expressed my
wishes, to pay my creditors in full. I want to clean-up my credit
history and have you reimburse my $14,000 dollars (they have not
fulfilled their agreement.)� I was on an open phone line discussing my
accounts with the Counselors to work-out an agreement and these people
basically laughed at me when I requested restitution ( I took offense
to that laughter),�� They offered to pay me $100.00 and suggested I
seek a bankruptcy attorney.� They want to leave me with this mess, that
they have created.
Chuck Wood, Southern California.
Filed Aug. 19, 2004 |
