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PrintHank Investigates: Cashing In
| When Kathy gave up her paycheck to be a stay-at-home mom, she had a tough time paying her credit card bills. So, like more and more people she opened the phone book and found the tempting advertising of credit counseling centers.
Get out of debt! they say: Consolidate your bills! Just pay us each month and we'll make sure your creditors get their money! Kathy signed up.
"I thought I was doing a great thing." But instead: she's faced with a growing mountain of paperwork--past due bills, late fees and collection notices. Her credit is ruined!
"I was absolutely incensed because I felt like it was just unacceptable, it's outrageous." Her cancelled checks prove She paid the agency on time, but it paid her creditors late! Or not at all! And finally, the agency disappeared.
"Nobody can correct this mess, nobody!" Our investigation reveals Kathy's a victim of a system out of control in Massachusetts. Agencies people trust with their financial futures are putting people deeper in debt. Many are breaking the law, and getting away with it.
"Its like a time bomb that's ticking away." Mortgage broker Brian Koss says he's denied hundreds of people home loans because counseling agencies destroyed their credit. So their credit was worse after counseling than it was when they went in?
"Yes, absolutely." We found dozens of similar complaints on file at the Attorney Generals office and the Better Business Bureau: credit counselors "did nothing" they say. "Just made matters worse." "I want my money back."
"What we see is people are thoroughly devastated." How can it happen? To be a credit counselor in Massachusetts there's no law that says you need any special training or education. Unlike 46 other trades and professions in this state, there's absolutely no special regulation or licensing. Does anybody know how many of these companies are operating in Massachusetts right now?
"At this time we do not." In fact, Massachusetts law only requires credit counselors be an attorney or registered as a non-profit corporation. Just fill out the paperwork, and you're in business. Is there anyone checking their background or knowledge or criminal record?
"Not specifically at the time of registration." There's more. Our investigation of state records found of the 25 credit counseling agencies listed in the phone book, only 6 are properly registered as non-profits, listing names addresses and company information! That means three out of four companies you might call for help are operating illegally! And we found seven companies in the phone book not only unregistered, but also based out of state! According to the Attorney General's office, that's also prohibited.
"They seemed not to accept any responsibility or any accountability for anything that they do." This woman was charged massive penalties after her counseling agency cashed her checks, but didn't properly pay her creditors! When she called to complain, the agency just ignored her.
"They just didn't want to hear about it." Right across the border in New York that couldn't happen. The law there requires background checks and government audits -- there's licensing, and tight regulation. How much difference does it make to these companies knowing that you're going to be watching them?
"I think the threat of facing criminal prosecution deters a lot of criminal activity." But here in Massachusetts it's financial roulette, with more and more losers. Consumers like Kathy who trusted her family finances to a phantom from the phone book. The agency took her money and vanished.
"They ought to be licensed and they ought to be regulated because how is the consumer protected? How is the consumer protected?" If you have a complaint about one of these agencies, the attorney generals office says it is very interested to hear about it. Officials there say "it is our intention to make sure these non-profits are following the law." To find out more information about credit counseling agencies or to file a complaint contact: The Massachusetts Attorney General's Office: 617-727-8400 They can tell you how many complaints are on file against specific credit counseling agencies and can also tell you how to file a consumer complaint. To make sure a credit counseling agency is registered as a non-profit organization, contact the Massachusetts Attorney General's Public Charities Division. Reputable credit counseling agencies can provide valuable services to people. Experts say if you are looking for one, ask the following questions: |