AFSCME 3357-HOF'S BLOG

Credit Counseling firm sued for misrepresenting not-for-profit status

Class action status was given to a lawsuit alleging Debticated Credit Counseling misrepresented its status as a not-for-profit corporation

CreditCourt Forum: Finally: Legal action against credit counselors

Is the credit counseling gravy train about to come to a screeching halt? I hope so.

The type of relationship alleged in in this lawsuit is common in the industry, in my experience. The nominal credit counseling company is registered as a 501(c)(3) tax exempt, but back office functions are handled by a for-profit corporation controlled by the same people. Secondly, there may be a loan brokerage firm involved as well, also operated by the same people. Kudos to
David Vendle, attorney for the plaintiffs from the firm Morris Polich & Purdy.