"Illinois Attorney General Sues
Cambridge Credit Counseling!"
April 21, 2005
Illinois Attorney General Lisa Madigan filed suit Thursday against
non-profit Cambridge Credit Counseling Corp. alleging its customers paid
excessive fees and remained in debt.
Madigan filed the suit in Sangamon County Circuit Court with Illinois
Department of Financial and Professional Regulation Secretary Fernando
Grillo. The suit follows an investigation into Agawau, Mass.-based
Cambridge Credit, a nonprofit credit counseling agency.
The investigation revealed that the organization accepted hundreds of
dollars in fees and debt payments from individual consumers getting debt
counseling, but did not pay consumers' creditors in a timely manner. In
addition, consumers were also allegedly charged one-time fees equal to
one-month's total debt payments and monthly fees of 10 percent of their
total monthly debt payments.
Illinois law limits initial fees to a maximum of $50 and monthly fees to a
maximum of $30. Madigan said consumers told her office they paid initial
fees of up to $827 and monthly fees of up to $83.
Cambridge Credit has more than 2,500 Illinois customers in its debt-relief
program.
The investigation also showed that Cambridge Credit outsourced the
majority of its operations to a group of for-profit companies under the
same ownership, primarily Brighton Credit or Brighton Debt, and paid them
more than $14 million for their services. Two other for-profit
organizations were paid more than $9 million.
The suit also alleges Cambridge Credit violated the Illinois Charitable
Trust Act, Illinois Consumer Fraud and Deceptive Business Practices Act
and the Illinois Debt Management Service Act by operating in the state
without a license and charging more than the maximum allowed fees.
The suit seeks a civil penalty of $50,000 per violation of the Consumer
Fraud Act and up to $1,000 per violation of the Charitable Trust Act, and
an order for Cambridge Credit to pay full restitution to customers.
In 2003, Madigan filed a similar suit against AmeriDebt, which filed for
Chapter 11 bankruptcy protection in 2004. The case is ongoing.
© 2005 American City Business Journals Inc.
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