Old Lawsuit said Cambridge Credit Counseling had conflicts

Monday, February 22nd, 2010 By

Cambridge Credit Counseling

Camebridge Credit Counseling

Many people nowadays are turning to credit counselors for help with debt management.

UPDATE: Way back in 2004, Cambridge Credit Counseling got sued for apparent conflicts of interest and illegally high fees. When this article was written originally, it was based on incorrect information from an outside source, which said Cambridge Credit Counseling  was involved in a lawsuit. However, the lawsuit discussed below was settled in 2007. So that other bloggers may learn from my mistake, I have included the inaccurate text below, and there are notes from the Cambridge Credit Counseling CEO below in the comments section that explain the reality of the situation.

Original Cambridge Credit Counseling article:

The state of Illinois is suing Cambridge Credit Counseling, both for apparent conflicts of interest and illegally high fees. Cambridge Credit Counseling is a debt management service. They help customers create budgets and get rid of debt.

In the lawsuit, the Attorney General of Illinois says that Cambridge Credit Counseling has an inappropriate relationship with for-profit companies Brighton Credit and Brighton Debt. Gather.com says: “Cambridge actually paid them to service debts instead of the for-profits paying Cambridge for directing business to them.”

Cambridge Credit a curious case

I’m not sure why Cambridge paying the companies is somehow worse than if the Brighton companies had paid them. I can see why it would be a crime for Brighton to pay Cambridge, but not the other way around. I guess I’m no financial expert. However, you can check out Cambridge Credit Counseling’s (See: http://www.cambridge-credit.org/pdf/conflict%20of%20interest%20policy.pdf) conflict of interest policy on the company’s web site.

Also at issue in the lawsuit is the very valid matter of startup fees. Illinois law states that companies like Cambridge Credit Counseling can only charge $50 for startup fees. However, Cambridge has been charging customers startup fees that are equivalent to their monthly credit card fees. Obviously, if someone is going to a credit counseling service, that is likely going to be a pretty hefty amount.

Future for Cambridge Credit Counseling

Cambridge Credit Counseling is a nationwide company, so it’s possible that more states could jump in on the lawsuit. So far, there hasn’t been word of anyone else joining in, but it probably isn’t far off.

As far as I can see, the company has not yet released an official statement. Cambridge Credit Counseling is the largest credit counselor in the country. The lawsuit certainly won’t put the company out of business, but it could get it to change its policies, which is probably what the Illinois Attorney General is going for.

  • Mark Sibley

    I got screwed by cambridge out of about 1500.00 before i wised up and still haven't seen my money

  • ruby oliver

    what about mississippi lawsuits dont we count?back in 2003and 4 i was paying cambridge to take care of my crediters, and i was sopoesed to be invalved in this lawsuit as well but i havent heard nothing!!!

  • http://personalmoneynetwork.com Elizabeth Fairchild

    It seems several other bloggers, news web sites and I became victims of the viral nature of the Internet. Gather.com, an extremely popular news aggregation site, reported on an old lawsuit as though it were current news. I take some comfort in knowing that I wasn’t the only blogger to snap up the story and run with it, but there is no excuse for my lack of fact-checking. Let this be a lesson to my fellow bloggers: Especially when it comes to legal matters, cover your bases and make sure you confirm a story’s validity before you post it online for all to see. Thank you, Mr. Viale, for calling this to my attention.

  • christopher viale

    cambridge credit counseling is not being sued by Illinois. cambridge was completely reformed back in 2004 and has operated as a pure charity since that time. The former management which was removed from the company by the attorney general's office of massachusettes did not run the company in a charitable way. Due to non compliance several suits were brought against the old cambridge but i can say that all suits were resolved in the past and if you refer to bbb report of cambridge you will see that cambridge has received one consumer complaint in the past 3 years. My staff is very proud of the work they do and hopefully this response can clear up any confusion this blog may have led to.

  • christopher viale

    good evening elizabeth, I am the president and CEO of the cambridge credit counseling and i have read your report. You are reporting on events that are related to the old cambridge credit counseling. Back in 2004 was tasked, by the attorney general of massachusettes, to reform the practices of cambridge and the former management and owners were removed from the agency.We have been operating as a true charity since mid 2004 and pride ourselves on the educational work we do. If you were to go to our bbb report you would see that we have had one consumer complaint filed against our charity within the past 3 years. Please provide your readership with information that is relavent to the new cambridge credit counseling as it has been 5 plus years since the reform. thanks

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