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(Franklin Debt Relief offers a debt settlement program to consumers
and is not a credit counseling agency. The information presented
below is for educational purposes, so that consumers can make a more
educated decision on whether debt settlement, the service offered by
FDR, or credit counseling, the option described below, is a better
debt relief solution for their situation).
A lot of negative media attention in recent years has been
concentrated on the abuses of non-profit debt relief industry. In
practice, non-profit status is almost a requirement in order to
conduct operations in the credit counseling arena. There are several
reasons for
why there are so many non-profit credit card debt relief companies, many
of these motivations are not necessarily “charity-based.” As the IRS
cautioned in 2003, some non-profit organizations are or were using
their position and otherwise “questionable practices” to “circumvent
state and federal consumer protection laws.”
One the primary ways that some non-profit debt relief companies
abuse their status rests on the manner in which they deceptively
market their services. Some claim they are non-profit, “just like a
church”, in marketing materials only to charge mandatory fees for
educational resources or debt management plans. Another common way
some debt relief companies manipulate their non-profit status is by
using it as a sign of credibility or government-approval in extreme
cases. Equally deceptive, others promote themselves as being about
more than profit, while their operations and business practices tell
quite a different story.
The purpose of this series, derived largely from the testimony of
the National Consumer Law Center (NCLC) before the House Ways and
Means Committee in 2003, is to detail the two primary
ways
some debt reduction companies have historically abused their
non-profit status.
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