FEDERAL TRADE COMMISSION SHUTS DOWN NATIONAL CONSUMER COUNCIL
The Federal Trade Commission on Monday shut down National Consumer Council Inc., citing “misrepresentations and omissions” by the Santa Ana nonprofit credit-repair firm and its for-profit affiliates.
A notice on the locked door at National Consumer’s Deere Street office
said a federal judge had appointed a financial guardian to take over the firm and affiliates London Financial Group, National Consumer Debt Council, Solidium, J.P. Landis and Financial Rescue Services Inc.
The notice said the FTC, in an April 23 lawsuit, “alleged that the companies violated the FTC Act by misrepresentations and omissions and violated other regulations and laws.” The notice also said the state Department of Corporations, which regulates financial companies, had issued a desist-and-refrain order against National Consumer.
Better Business Bureau of the Southland President Bill Mitchell called National Consumer the largest and most egregious of deceptive debt-relief operations. He said the company collected high upfront fees but often left clients worse off than they started, sometimes in bankruptcy protection — a statement disputed by a National Consumer spokeswoman.
SOURCE: Los Angeles Times
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PROLIFERATION OF CREDIT COUNSELING AGENCIES IN RECENT YEARS
The credit counseling industry has grown dramatically in recent years, as Americans increasingly file for personal bankruptcy. According to a Congressional report, 1.66 million individuals filed for bankruptcy in 2003, with many of the filers seeking debt management help from nonprofit credit counseling agencies.
There are approximately 1,000 active tax-exempt credit counseling agencies in the United States the majority of which have had their tax-exempt status recognized within the past four years. According to the Washington Post, an estimated 9 million Americans seek credit counseling advice annually and “industry officials estimate that 2 million consumers are on active credit repair programs at any one time.”