I often get questions from people asking me about Consumer Credit Counseling Services, also known as CCCS. I thought I’d give you a quick little summary of CCCS and the types of services they offer.
CCCS offices are members of the NFCC. The NFCC used to stand for the National Foundation for Consumer Credit but changed their name to National Foundation for Credit Counseling. I could never understand the original name of National Foundation for Consumer Credit since they were actually working to get people out of credit obligations rather than promoting consumer credit. I guess that’s exactly why they changed their name.
The NFCC collects fees and royalties from non-profit companies that pay to be a member and certified or recognized by the NFCC. You can learn more about their income streams by looking at their 2007 990 non-profit tax returns. Interesting, they don’t make this easily available on their website like other non-profits do? It would be more transparent that way. To see additional years you’ll have to go to Guidestar.org and register to look at them.
The NFCC makes a significant amount of money from housing counseling as well as credit counseling. There has been some conern about their housing counseling efforts. NFCC to HPF: “Let us run the show or else”
The debt management programs put forward by CCCS groups only extend the credit policies and terms to consumers rather than creating a repayment solution that best meets the consumers needs. CCCS is also primarily funded by creditors which creates a horrible and obvious conflict for member agencies. On one hand they are thought to be impartial and protect consumers from debt problems but on the other hand their money comes from collecting payments from consumers and returning them to creditors. I’m not aware of any industry that will turn and be on the offensive, when needed, against their funding source.
In fact if you do a search of Google it will clearly show you little proactive effort by CCCS or NFCC to help stamp out bad creditor behavior and as a charity, to lead the march to defend consumers against financial services abuses.
A credit counseling agency typically receives most of its compensation from the creditors to whom the debt payments are distributed. This funding relationship has led many to believe that credit counseling agencies are merely a collections wing of the creditors. This fee income, known as “Fair Share,” are contributions from the creditors that originally earned the agency 15% of the amount recovered. However, in recent years, Fair Share contributions have dwindled steadily, with contributions of 4-10% being the most common.
Still the NFCC considers bankcard companies to be one of their primary “constituents,” and the NFCC website promotes the fact that they collect $5 billion for creditors each year. It also promotes their efforts to steer consumers away from bankruptcy. – Wikipedia
In a perfect world it would be nice to see CCCS and the NFCC operate independent from creditor funding, to have a fiduciary duty to represent the best interests of the consumer and to work for solutions that best help the person in trouble. But then again we don’t live in a perfect world, do we?
Consumer Credit Counselling Service in the UK has had some serious facts brought forward, including the fact that they have a direct tie to a PR firm that works for credit card companies to avoid negative press about credit cards.
I am not certain about the business relationship between CCCS of the U.S. and CCCS UK.