Attorneys general accuse AscendOne of misleading consumers about its for-profit status
SEATTLE – A debt management business that allegedly misled consumers about its for-profit status will pay $4.5 million to settle claims brought by 20 attorneys general.
“AscendOne used nonprofit credit counseling agencies as a front to take advantage of consumers,” Attorney General Rob McKenna said. “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.
Attorneys general alleged the company and its owner, Bernaldo Dancel, misled consumers into believing they would receive debt management services from nonprofit organizations when, in fact, AscendOne performed the services. The states also alleged that consumers frequently did not receive promised credit counseling and that some did not benefit at all from the debt management plans.
The U.S. Senate Committee on Governmental Affairs profiled the defendants in a 2004 report titled, “Profiteering in a Non-Profit Industry: Abusive Practices in Credit Counseling.”
Washington filed its version of the settlement today in King County Superior Court. The defendants denied any wrongdoing, but agreed to comply with all laws in states where they do business, including Washington’s Debt Adjusting Statute and Consumer Protection Act.
The agreement prohibits the defendants from misrepresenting that their services are performed by a nonprofit agency, the purpose of required fees and 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 ensure the consumer can afford the plan and arrange credit counseling.
The Washington Attorney General’s Office, which served on the executive committee that negotiated the settlement, will receive $290,000 paid in installments through 2014. The money may be used to reimburse the state for costs related to the investigation and litigation, for consumer education, or other uses determined by the office.
McKenna thanked Assistant Attorney General David Huey and former investigator Lisa Hanna for their work on the case.
The following attorneys general participated in the settlement: 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.
CONSUMER RESOURCES FOR DEALING WITH DEBT:
- If you’re in debt, 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 at www.nfcc.org or 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.
- The Attorney General’s Office also provides information on managing your debts at www.atg.wa.gov/credit.aspx.
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