Nonprofit Credit Counseling Scams

Lately, an alarming trend has federal and state regulators concerned about credit counseling organizations that use their nonprofit status as a way to circumnavigate many consumer protection laws.

An increasing number of consumer complaints points to these nonprofits. The trend right now is to run a counseling service with tax-exempt status, or 501(c)(3), so that many of the federal statues that regulate these agencies do not apply to the non-profit organization.

Though the Federal Trade Commission acknowledges these counseling scams, they also stress that there are legitimate organizations that provide valuable services to consumers.  The weight of finding out which organization to use however, falls on the shoulders of informed consumers.  ■