All Credit Counselors Are Not Alike

To the Editor:

As president of Cambridge Credit Counseling Corp., a nonprofit credit-counseling organization that was mentioned in Debra Blum’s article, “Checking Up on Credit Charities” (August 21), I want to commend your publication for bringing attention to what we too believe are troubling issues in our industry. We agree that there are credit-counseling companies that prey on defenseless consumers by charging high fees and offering little or no value in return. While making it harder for people to get out of debt, “debt mills” by their unethical practices in our industry ultimately damage the reputations of companies such as ours, which operate with the best interests of consumers in mind and fully comply with federal and state laws and regulations.

While I applaud your efforts to identify companies that have wrongly taken advantage of consumers in the past, you have incorrectly and irresponsibly placed us in this category. It is apparent that the information included within your article came from a report issued in April by the Consumer Federation of America and the National Consumer Law Center, which we believe carried numerous mischaracterizations and factual errors about our industry. In addition, the report misrepresents Cambridge Credit, beginning with the context in which our executive compensation levels were listed. I’d like to make clear that our executives are paid in line with other nonprofit and for-profit organizations that manage comparable sizes of revenue, in accordance with the Internal Revenue Service regulations.

Ms. Blum’s article addresses ways in which nonprofit credit-counseling organizations make money, specifically by collecting fair-share monies from creditors and client fees. Through our Good Payer Program, Cambridge rebates half the money it receives from creditors, in the form of “fair share,” to clients who stick with a debt-management program consecutively for six months. Since its inception in 1996, the program has rebated over $11-million to Cambridge clients and has ultimately propelled Cambridge’s retention rates to one of the highest in the industry.

To address the point of excessively high client fees, I would also like to note that Cambridge Credit’s fee structure has been approved by the states of New York, Connecticut, Michigan, and Maine and was evaluated by an independent research firm, which stated that our fees were on par with the rest of the industry and, in many cases, were even lower. You listed in the article the income we received from client fees in 2001, yet failed to mention that our fee structure enables us to provide clients with a superior level of service. In short, Cambridge Credit clients get what they pay for, and then some. Clients who fully discharge all debts under the Cambridge Program receive between one and one-half to two times their initial fee as a rebate.

As a pro-consumer organization, our central mission is to help our clients repay their debts and provide the education and counseling needed for them to gain control of their financial lives. By offering our customers educational seminars, incentive and rebate programs, creditor relations, and financial-training programs, we have set the standard for how traditional nonprofit credit-counseling services support their clients.

We fully support regulation of the credit-counseling industry that fairly evaluates organizations based on their level of service and client satisfaction and that helps weed out those companies that ultimately do a disservice to both customers and their peers.

John Puccio
President
Cambridge Credit Counseling Corp.
Agawam, Mass.

Editor’s note:

The Chronicle’s reporting about Cambridge Counseling was based on a review of its informational tax return and was not taken from the report Mr. Puccio mentions.