Bill Would Allow For-Profit Debt Firms to Operate
Tuesday, March 11, 2008
A Columbia-based for-profit credit counseling company whose business practices are being reviewed in a number of states is on track to be licensed in Maryland under legislation moving through the General Assembly.
Maryland is one of only a handful of states to close its doors to for-profit firms that charge consumers deep in debt to find financial security. But AscendOne Corp. and its supporters say that the company has helped thousands of consumers in 35 states recover good credit and get out of debt. The legislation would allow the companies to operate in Maryland, just as nonprofit counselors do.
Opponents, including consumer groups that have fought the proposal for two years, call for-profits such as AscendOne predators cashing in on vulnerable homeowners struck by the home-foreclosure crisis.
"The bill's a disgrace," said Sen. Brian Frosh (D-Montgomery), the Judicial Committee chairman. "We've got an economy where people are really struggling. We need to make a profit on people whose debt are so high they need help?" Frosh was one of five senators to vote against the bill, which passed the Senate easily last week.
AscendOne said its business practices are legitimate and helpful to thousands of people in need of counseling. "We have not been accused by any government agency or attorney general of any wrongdoing," said AscendOne's chief operating officer, Michael Croxson.
Lobbyists for AscendOne have struck out in the past in the House of Delegates, where the measure has been shelved in committee. But Economic Matters Committee Chairman Dereck Davis (D-Prince George's) said he plans to bring it up for a vote this week after a hearing today.
AscendOne is one of the largest players in the growing for-profit debt counseling industry. The business has long been dominated by local nonprofits-- there are 36 in Maryland -- that provide face-to-face financial guidance to help consumers manage their debt.
But the business has shifted dramatically in the last decade as for-profit firms have marketed themselves on television and, like AscendOne, provided counseling over the phone and on the Internet.
The for-profits have come under the scrutiny of Congress and state governments as the explosion in subprime mortgages has saddled homeowners with climbing debt.
"It's a bounty system with a clear profit motive" Del. Elizabeth Bobo (D-Howard) said of for-profit companies. "You bring in a certain amount of money, you get rewarded." Bobo was one of the lead sponsors of a broad bill five years ago to regulate nonprofit counseling firms.
AscendOne's business practices are being reviewed by attorneys general in Maryland and several states, government sources briefed on the investigations said. The sources asked to remain anonymous because the investigations are ongoing.
The sources said a common focus of the inquiries is to determine whether the companies engaged in unfair and deceptive trade practices by making representations to clients about fixing credit and debt it did not deliver.