In news stories, personal finance columns and even in government publications, consumers are often told to look for a nonprofit status, National Foundation for Credit Counseling (NFCC) accreditation, or the title "Consumer Credit Counseling Service" when seeking help with credit counseling. But as some 1400 Utah consumers found out the hard way this past week, those are far from certain guarantees for finding a good credit counseling agency.

As the Salt Lake Tribune reported this week:

The "Utah Division of Consumer Protection on Tuesday seized control of Consumer Credit Counseling Service of Utah to investigate why more than $60,000 is missing from a trust account the agency set up to pay bills for clients trying to get out of debt. Acting on a court order, the agents entered the nonprofit credit counseling service's Salt Lake City office and told staff members gathered for a companywide meeting that CCCS was closed and its bank accounts and assets were frozen. ... For four decades, Utahns with too many debts trusted CCCS to help them pay their bills and avoid bankruptcy. Each month, an estimated 1,400 Utahns sent money orders or cashier's checks to the company, which put the money in a trust account before paying clients' bills. Beginning in January, however, checks written on the trust account started bouncing and clients' bills went unpaid. ... Under the court order, (CCCS President Scott) McCagno is forbidden from any contact with CCCS or its bank accounts. He also must return all CCCS assets in his possession, including cell phone, credit cards and a 2000 BMW."

The CCCS of Utah held many of the qualities frequently recommended: it was a CCCS, had been in existence for decades, had nonprofit status and until just weeks before being seized by regulators, was accredited by the NFCC.

This is not the first time the NFCC or its members have run into problems. The Federal Trade Commission has forced NFCC and its CCCS affiliates to disclose that NFCC affiliates serve creditors' interests because they often have creditors on their boards and are primarily funded by creditors, not consumers.

Earlier this year, the NFCC named former Allfirst Financial president Susan Keating as its new president. As reported in the Baltimore Business Journal, "Keating resigned from Allfirst in July 2002 after philosophical differences with Eugene Sheehy, who had just been named the bank's chairman. At the time, Allfirst was sorting through the fallout from a scandal in which foreign currency trader John Rusnak hid $691 million in currency trading losses at the bank."

CRCS says consumers should always exercise common sense and ask a lot of questions before signing on with any credit counseling agency. CRCS suggests consumers ask whether consumers fund the credit counseling agency or if it is funded and controlled by their creditors. Consumers should ask about hours of operation, whether they can access their accounts online and whether they can reach a live person on the phone or in person. CRCS also recommends consumers learn more about the questions consumers should ask by going to the CRCS website at http://www.responsiblecredit.com.