Sometimes the strangest stories come out of the simplest questions. In this case it was an inquiry about National Foundation for Credit Counseling (NFCC) agencies in Connecticut.
From the NFCC credit counseling agency locator page for Connecticut there were 25 agencies listed.
So having some time to kill, research ensued. But what was perplexing was how some of the agencies that were listed on the NFCC locator page for consumers, were either not licensed for debt management in the state and/or not licensed to do business in the state, and most appear to not be registered to solicit donations.
On July 14, 2016 the list of credit counseling agencies listed on the NFCC locator page results looked like this.
A quick look at the agencies listed found that of the agencies listed for consumers to contact, 11 were not licensed to provide debt management services in Connecticut and ten were not registered to do business in the state and 17 appear to not be registered to solicit donations.
Now one explanation offered by Bruce W McClary, Vice President of Communications for NFCC was that “our agencies routinely refer clients to other agencies when they seek a DMP in a state in which the agency is not able to provide debt-management services.” That is certainly one possible logical explanation. That would infer they refer consumer out to other agencies but I invite readers to do their own secret shopping calls and find out if that is accurate.
Bruce did an excellent job of defending the NFCC in my inquiries trying to understand what was going on.
Bruce said “it appears to us that Connecticut does not require out-of-state, tax-exempt organizations to register with the state’s Department of Revenue Services, and only requires licensure for debt adjusters.”
I will be the first to say, I’m not an attorney and everyone should be free to research these issues themselves and come to their own conclusions.
The State of Connecticut does have a form for a non-profit to file for a Certificate of Authority to do business in the state. The fee is only $40. As the form says, “A foreign corporation desiring to transact business in Connecticut may obtain a certificate of authority by filing the Application for Certificate of Authority.” To me, that appears to require even non-profit companies to be licensed to do business in the state.
Then there is this, “Once a foreign corporation has obtained a Certificate of Authority from the Connecticut Secretary of State, the foreign corporation may transact business within the state and has the same rights, privileges, duties, and restrictions as a Connecticut domestic corporation.” The Northwest Registered Agent company provides this online advice.
If anyone can find a specific Connecticut statute that exempts a foreign non-profit company from registering, please let me know in the comments below. I simply could not locate such an exception.
But the State of Connecticut does require all non-profit organizations who solicit money to be registered with the Department of Consumer Protection. An exception to this rule would be “If an organization is located outside of CT and only solicits via the internet (donate button on website), it does not need to register. This assumes that a resident of Connecticut just happens across the out-of state organization’s website on their own accord; the organization did not direct the resident to the website.” – Source But the State also says, “Non-profit, charitable organizations must register with the Department of Consumer Protection Charities Unit.” – Source
Most of the NFCC agencies listed on the Connecticut list were not registered to solicit contributions.
When it came to licensed debt management companies in the State. Here is the list of current agencies the state provides online.
[documentcloud url=”http://www.documentcloud.org/documents/2995971-CT-Debt-Adjusters-Listing-7-15-2016.html” sidebar=false text=false]
While there are more debt management companies on this list than on the NFCC locator list, not all licensed debt management companies are NFCC members.
A look at the current status of NFCC members listed for consumers to contact in the State of Connecticut looked like the image below on 7-14-2016 when I contacted NFCC.
The red cells show companies that could not be found using the online State search tools. The green cells are for companies that met all the requirements, using the same online search tools.
What Kind of Gold Standard Consumer Confidence Does NFCC Offer?
Now I was very confident that the NFCC, as a purported leading association of credit counseling organizations, would engage in some sort of checking, audit, or verification that the member agencies they were sending consumers to would have the authority to offer debt management and other counseling services in Connecticut. I assumed, and maybe that was a mistake.
Bruce McClary of NFCC painted a different picture. He said, “Our members are responsible for updating their listing information, and we rely on our agencies to accurately report the states in which they are licensed to operate, or in which they otherwise operate where no license is necessary.” And he said, “Our members’ listings therefore may not be limited to only those locations where they provide debt-management services.”
Bruce also offered, “the NFCC regularly audits our members’ compliance with our Member Quality Standards, and we rely in that process on our agencies to report to us those states in which they operate in accordance with our requirements.”
So it appears to me that no outside or inside audit or verification is conducted on what member agencies claim. Why not?
What Disclaimers Do Consumers See?
It isn’t until a consumer clicks on an agency hyperlink for the state they are searching on that a small disclaimer on licensing is offered. For example, the CCCS of Beloit listing displays the following when you click on it in Connecticut.
At the very bottom you will see a disclaimer that says, “This agency may not be licensed in all states.” But no listing of which states they are licensed in is offered so there is no easy way for a consumer to know or have known which states the agency claims to be licensed or authorized to conduct business. Emails I sent to CCCS Beloit went unanswered or bounced.
At the very least, it seems this agency should have been registered to do business in Connecticut since their service listing has a fee associated with every option offered.
But That’s Not the End Yet
Now typically a story like this might end with a message to consumers to know who you are dealing with. But this story went oddly off the tracks when NFCC started removing agencies consumers should contact after I asked them for a comment.
In the days immediately after I contacted NFCC, they started removing agencies from approved lists. Within two days, eight NFCC member agencies were removed. Here is the list on 7-16-2016.
When pressed for an explanation why agencies were now being removed from the state listing, no answer was given.
A couple of logical conclusions are that NFCC was sending consumers to agencies that were either not licensed or not authorized to do business in the states the NFCC online locator gave the impression or claimed they were authorized in. This could have been created by agencies not providing correct information. Another conclusion is my inquiry caused someone at NFCC to actually take a look at the member agency listings and they in turn found the same issues I had. If they’ve started auditing them, I applaud them for that.
In an effort to help, I did suggest the NFCC agency locator listing could be improved to accurately reflect the specific services the listed agencies actually offered in the state listing a consumer was looking at. I said, “Bottom line, I want to be factual. And if dealing with all of this is an opportunity for improvement and a chance for the NFCC to clarify their consumer listings and you are taking that on, let me praise you for that.”
The NFCC response was, “We certainly value your comments related to this matter. In keeping with our continued efforts to connect people with certified, not-for-profit financial advocates, we will take your suggestions under advisement.”
It’s awesome to connect people with certified entities but they should also be certified in registration as well as whatever other hoops they have to jump through.
I have no idea how much guidance the NFCC gives their agencies when it comes to license, compliance, or registration. They claim to offer a significant amount of evaluation and standards in conjunction with COA but while “agencies must be licensed” it does not appear that may be a complete process. Hopefully that will change.
Here is the NFCC press release about quality standards that is reflected on their website.
[documentcloud url=”http://www.documentcloud.org/documents/2995998-NFCC-COA-FactSheet.html” sidebar=false text=false]
And while I used the State of Connecticut as the example in this story, I had gone on to collect similar information on a substantial number of other states and discovered similar issues.
When I published the piece I meant to applaud the companies that seemed to tick all the boxes and have all green cells. Those companies included: Advantage Credit Counseling Service, American Consumer Credit Counseling, Apprisen, Clearpoint Credit Counseling Solutions, GreenPath Debt Solutions, Money Management International, Navicore Solutions, and Springboard Nonprofit Consumer Credit Management. Good Job!
If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.
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