AscendOne to stop calling itself 'non-profit' debt counselor in $4.5 million settlement

couple looking worried over billsA debt management company that misled consumers about its for-profit status agreed to pay $4.5 million to settle claims brought by 20 states, Washington Attorney General Rob McKenna announced.

"AscendOne used nonprofit credit counseling agencies as a front to take advantage of consumers," McKenna said in a statement. "This settlement ensures that consumers who are sold the company's debt management plans can actually afford the service, will receive credit counseling and will know where their money is going."

Maryland-based AscendOne Corp., and its subsidiaries Amerix Corp., CareOne Services, Inc., FreedomPoint Financial Corporation and 3C, Inc., contract with nonprofit credit counseling agencies.

The 20 attorneys general accused AscendOne and its owner, Bernaldo Dancel, of misleading consumers into believing they would receive debt management services from nonprofit organizations, while AscendOne actually performed the services. The states also alleged that consumers frequently failed to receive promised credit counseling and that some didn't benefit at all from AscendOne's debt management plans.

AscendOne, which, according to its website, has received numerous awards and accolades, was profiled by The U.S. Senate Committee on Governmental Affairs in the 2004 report "Profiteering in a Non-Profit Industry: Abusive Practices in Credit Counseling."

The defendants denied any wrongdoing, but as part of the settlement, agreed to comply with all laws in states where they do business.

The agreement requires AscendOne to clearly disclose:
  • That their services are performed by a nonprofit agency.
  • The purpose of fees.
  • The impact that entering into a debt management plan may have on a consumer's credit history.
Prior to enrolling a consumer in a debt management plan, the defendants must also ensure the consumer can afford the plan and arrange credit counseling.

The $4.5 million fine will be distributed among the following 20 states: Arkansas, Arizona, California, Delaware, District of Columbia, Idaho, Indiana, Maryland, Massachusetts, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Washington and West Virginia.

If you're in debt, consider the following:
  • A nonprofit credit counselor can help you develop a personalized financial plan. The U.S. Department of Justice's U.S. Trustee Program provides a list of government-approved credit counseling agencies.
  • The National Foundation for Consumer Counseling provides a list of member agencies. You can also call call 1-800-388-2227 for 24-hour automated office listings.
  • A credit counselor may recommend a debt management plan that includes consolidation. You deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors.
  • The Federal Trade Commission's guide, "Knee Deep in Debt," provides tips for repairing your credit, choosing a credit counselor and making a debt management plan work for you.
  • A new law that took effect Oct. 27 prohibits any for-profit debt-relief company that sells services over the phone from collecting advance fees. Companies that solicit services over the phone must also disclose how much the process costs and how long it takes to see results.

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