AG Slaps Credit Counseling Firms Claiming to Be Nonprofits

Print Share on LinkedIn More

November 5, 2010; Source: West Virginia Record | A debt management company that misled consumers into thinking they were doing business with nonprofit credit counseling agencies has paid West Virginia $169,400 as part of an agreement to settle a claim brought by the state’s attorney general.

Amerix signed up customers who believed they would receive counseling and debt management services from a nonprofit, which in fact were for-profits. By passing themselves off as nonprofits, the firms charged more for their services than the state permits for-profits to collect. Under Virginia law, the state sets a 2 percent ceiling on fees for for-profits, compared to 7 percent for nonprofits. In addition, very few of the consumers signed up by the company said they had any dealings with the firms’ credit counselors or benefited financially in any significant way.

Under the settlement, Amerix is prohibited from misrepresenting that the credit counseling services are being provided by a nonprofit agency. In addition, the company agreed not to enroll consumers into debt management plans unless they know they can afford it and are provided with meaningful credit counseling. According to the West Virginia Record, the state’s claim against Amerix was part of an action by 19 states and the District of Columbia that requires AscendOne companies to pay a total of 44.5 million to states’ attorneys general.—Bruce Trachtenberg