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FTC Alleges AmeriDebt Misled Consumers

WASHINGTON-Debt counseling service AmeriDebt was sued last week by the Federal Trade Commission which charged the company with misleading debtor customers over its fees and status as a non-profit organization.

The FTC said AmeriDebt charges upfront fees for its services, despite claims to the contrary in its advertising, and does not teach consumers how to handle their finances but instead enrolls them in "debt management plans" under which they make monthly payments for their debt, which then get disbursed to creditors.

The suit, filed in federal court in Maryland, also claims that AmeriDebt operates to make money for affiliates including DebtWorks Inc., which it said serviced customer accounts through last year.

"We will not allow consumers to be duped into 'contributing' hundreds of dollars to these so-called nonprofits," said Howard Beales, director of the FTC's bureau of consumer protection, in a statement. "Consumers' money didn't go to creditors. It just ended up lining the pockets of the defendants." AmeriDebt, of Germantown, Maryland, already faces lawsuits in at least four states.

Foundation Gets $500K Grant For Homebuyers

WASHINGTON-The National CU Foundation said it has received a $500,000 grant from the U.S. Department of Housing and Urban Development to help finance counseling programs at credit unions for first time homebuyers. The HUD money will go to 14 credit unions and 10 states that have pledged to provide matching funds, according to Gary Officer, executive director of the NCUF. "The money will go to help credit unions fund pre-purchase and post-purchase counseling to support first time homebuyers," Officer told The Credit Union Journal. The funds were awarded through HUD's Conventional Housing Counseling program and its Section 8 Voucher Housing Counseling program, that allows residents of subsidized housing to use rental vouchers to finance first time home purchases.

Fiserv Expands Check Processing

BROOKFIELD, Wis.-Fiserv, already one of the largest private-sector processors of checks, said it has signed with Loomis, Fargo & Co. to open a check-image capture facility in a Loomis-Fargo plant in El Paso, Texas. The facility will handle checks for Fiserv's existing processing clients in the region. Fiserv, the nation's third largest check processor, operates 49 check processing centers around the country.

PCU To The Aid Of Fire Victims

PAWTUCKET, R.I.-Pawtucket CU said it has donated funds to extend the stay at a local hotel for 10 families left homeless by a fire at Greenhalgh Mill. The funds will enable the families to stay beyond the three days provided by vouchers from the Rhode Island Red Cross. The $700-million credit union also said it will provide up to $2 million in low-interest mortgages and personal loans to victims.

Ind. CU Helping Music Program

EVANSVILLE, Ind.-Evansville FCU said it is continuing its efforts to promote music in the local public schools. Proceeds from the Jingle Bell Rock concert and the sale of CDs from the show will be used to fund music programs at the local middle school. The credit union donated $6,200 last year to promote music in local elementary schools.

Economics 101: An ATM

TEXARKANA, Texas-The Texarkana Independent School District last week approved a request from TEXAR FCU to place an ATM in Texas High School's cafeteria. The ATM will not cost the district any money and the district will not be held responsible for any problems that might occur concerning the ATM.

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