Consumers for Responsible Credit Solutions Warns: NFCC Accreditation or a CCCS Title No Guarantee of a Good Credit Counseling Agency

WASHINGTON, April 2 /PRNewswire/ -- A national consumer advocacy group,
Consumers for Responsible Credit Solutions, is warning consumers that some
commonly given advice offered to those seeking a credit counselor may not be
all that good.
    In news stories, personal finance columns and even in government
publications, consumers are often told to look for a nonprofit status,
National Foundation for Credit Counseling (NFCC) accreditation, or the title
"Consumer Credit Counseling Service" when seeking help with credit counseling.
But as some 1400 Utah consumers found out the hard way this past week, those
are far from certain guarantees for finding a good credit counseling agency.
    As the Salt Lake Tribune reported this week:

     The "Utah Division of Consumer Protection on Tuesday seized control of
     Consumer Credit Counseling Service of Utah to investigate why more than
     $60,000 is missing from a trust account the agency set up to pay bills
     for clients trying to get out of debt. Acting on a court order, the
     agents entered the nonprofit credit counseling service's Salt Lake City
     office and told staff members gathered for a companywide meeting that
     CCCS was closed and its bank accounts and assets were frozen. ... For
     four decades, Utahns with too many debts trusted CCCS to help them pay
     their bills and avoid bankruptcy. Each month, an estimated 1,400 Utahns
     sent money orders or cashier's checks to the company, which put the money
     in a trust account before paying clients' bills. Beginning in January,
     however, checks written on the trust account started bouncing and
     clients' bills went unpaid. ... Under the court order, (CCCS President
     Scott) McCagno is forbidden from any contact with CCCS or its bank
     accounts. He also must return all CCCS assets in his possession,
     including cell phone, credit cards and a 2000 BMW."

    The CCCS of Utah held many of the qualities frequently recommended: it was
a CCCS, had been in existence for decades, had nonprofit status and until just
weeks before being seized by regulators, was accredited by the NFCC.
    This is not the first time the NFCC or its members have run into problems.
The Federal Trade Commission has forced NFCC and its CCCS affiliates to
disclose that NFCC affiliates serve creditors' interests because they often
have creditors on their boards and are primarily funded by creditors, not
consumers.
    Earlier this year, the NFCC named former Allfirst Financial president
Susan Keating as its new president.  As reported in the Baltimore Business
Journal, "Keating resigned from Allfirst in July 2002 after philosophical
differences with Eugene Sheehy, who had just been named the bank's chairman.
At the time, Allfirst was sorting through the fallout from a scandal in which
foreign currency trader John Rusnak hid $691 million in currency trading
losses at the bank."
    CRCS says consumers should always exercise common sense and ask a lot of
questions before signing on with any credit counseling agency.  CRCS suggests
consumers ask whether consumers fund the credit counseling agency or if it is
funded and controlled by their creditors.  Consumers should ask about hours of
operation, whether they can access their accounts online and whether they can
reach a live person on the phone or in person.  CRCS also recommends consumers
learn more about the questions consumers should ask by going to the CRCS
website at http://www.responsiblecredit.com.