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CFA, NCLC Release Study Targeting Credit Counseling Agencies

The Consumer Federation of America (CFA) and the National Consumer Law Center (NCLC) yesterday released a report criticizing credit counseling agencies, stating that consumers drowning in credit card debt often get bad advice from them and are frequently deceived and charged excessive fees, the Associated Press reported. The criticism came soon after the House overwhelmingly approved bankruptcy reform legislation (which would require consumers to receive credit counseling before filing for bankruptcy protection). The growing business of credit counseling, which is heavily advertised, has seen an increase in abusive practices and outright scams, the report says. In addition, consumer advocates state that many counseling agencies trade on their nonprofit status to gouge consumers. "More consumers are getting bad advice and access to fewer real counseling options," Deanne Loonin, an attorney with the NCLC, said at a news conference. "Meanwhile, most state and federal regulators appear to be asleep at the switch."

American Bankruptcy Institute Update. April 10, 2003 Issue

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