West Virginia has reached a settlement agreement with Cambridge Credit Counseling Corp. of Agawam, Massachusetts, that will result in refunds of $250,000 to hundreds of West Virginia consumers who were overcharged for the company's services.
Cambridge targets consumers facing dire financial circumstances and offers to help them make payment agreements with creditors, commonly known as "debt management plans."
Consumers seeking help with debt increasingly go to the Internet seeking solutions.
Online, consumers find an endless stream of companies with slick web sites providing little to no help for these cash-strapped consumers and charging exorbitant fees for services that they may or may not provide.
West Virginia Attorney General Darrell McGraw's office said it determined that Cambridge was providing a legitimate service that genuinely assisted consumers in making debt management plans with their creditors.
However, prior to October 2005, Cambridge charged consumers an up-front fee that was not used to pay off the consumer's debt and was also charging consumers a monthly service fee of 10 percent.
West Virginia's "debt pooling" statute that governs debt management plans prohibits companies from charging up-front fees and caps monthly service fees at seven percent of the consumer's monthly payment to the debt management plan.
"Despite concerns about Cambridge's practices in the past, Cambridge has demonstrated that it is now one of the 'good guys' in an industry that is coming under increasing scrutiny by state and federal regulatory agencies," McGraw said.
"My office plans to continue its vigilance over the debt relief industry to ensure that West Virginia consumers receive the genuine help they need and are not further victimized by companies that take their money and run."
