Old Lawsuit said Cambridge Credit Counseling had conflicts
Cambridge Credit Counseling
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.