AscendOne Corp., a Columbia, Md.-based debt management business, will pay $4.5 million to settle charges that the company misled consumers about its for-profit status.
Twenty state attorneys general alleged the company and its owner, Bernaldo Dancel, wrongly told consumers they would receive debt management services from nonprofit organizations when, in fact, AscendOne performed the services. The states also alleged that consumers frequently did not receive promised credit counseling and that some did not benefit at all from the debt management plans.
"AscendOne used nonprofit credit counseling agencies as a front to take advantage of consumers,” said Rob McKenna, attorney general for the state of Washington. “This settlement ensures that consumers who are sold the company’s debt management plans can actually afford the service, will receive credit counseling and will know where their money is going.”
McKenna's office announced the settlement Thursday when the state filed its version of the settlement in King County (Wash.) Superior Court. The defendants denied any wrongdoing, but agreed to comply with all laws in states where they do business, including Washington’s Debt Adjusting Statute and Consumer Protection Act.
AscendOne Corp., and its subsidiaries Amerix Corp., CareOne Services Inc., FreedomPoint Financial Corp. and 3C Inc., contract with nonprofit credit counseling agencies.
The U.S. Senate Committee on Governmental Affairs profiled the defendants in a 2004 report titled, “Profiteering in a Non-Profit Industry: Abusive Practices in Credit Counseling.”
The agreement prohibits the defendants from misrepresenting that their services are performed by a nonprofit agency, the purpose of required fees and the impact that entering into a debt management plan may have on a consumer’s credit history. Before enrolling a consumer in a debt management plan, the defendants must ensure the consumer can afford the plan and arrange credit counseling.
Exactly where all of the settlement money will be distributed was unclear at press time. But the Washington Attorney General’s Office, which served on the executive committee that negotiated the settlement, reported it will receive $290,000 paid in installments through 2014. The money may be used to reimburse the state for costs related to the investigation and litigation, for consumer education, or other uses determined by the office.
The following attorneys general participated in the settlement: Arkansas, Arizona, California, Delaware, District of Columbia, Idaho, Indiana, Maryland, Massachusetts, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Washington and West Virginia.