There are honest credit counseling agencies that provide user-friendly services like flexible hours, easy access by telephone or Internet, an easy electronic payment processes, classes and counseling. But as the demand for credit counseling has increased, the nature of these agencies has changed, and many credit counseling agencies are fraudulent and deceptive.
Federal regulation of the credit counseling business is fairly loose. State regulation is generally ineffective, and this type of consumer service is not regulated at all in Florida. That means that you must be very cautious when engaging with a credit counseling agency.
Here are some of the techniques used by some credit counseling agencies that are either unethical or even illegal:
- Sometimes agencies apply the first monthly payment you make on your debt management plan to their fees instead of making payments to creditors, which results in late fees from creditors. Agencies may not disclose this up front.
- Credit counseling agencies will not always pay your bills on time. It's a good idea to check your monthly statements from creditors to make sure the payments are being made as promised by the agency.
- Some agencies won't follow through with their services, or may take your money and not make your payments. You'll need to stay on top of any agency you decide to work with.
How to report dishonest business practices by your credit counseling agency
If during the course of your relationship with a credit counseling agency you suspect a violation of the law, you can file a complaint with the Federal Trade Commission (FTC). If they see a pattern of complaints against the same agency, they will take action.
For help from the FTC, you can write:
Federal Trade Commission
Washington D.C. 20580