Companies Abusing Their Non-Profit Status for Debt Relief Profits
*Epic Debt Relief is not a credit counseling agency and does not affiliate with any such parties. The company serves consumers with debt settlement plans, and has provided the information below strictly for educational purposes for consumers in need of debt relief solutions.*
The National Consumer Law Center is a great source of information about the goings on of non-profit debt relief organizations. In many cases, these businesses abuse their position by focusing more on profit and sales than on their non-profit claim of educational services to the general public. These companies are allowed to make a profit, but there are limitations on how much they should be making and what part of their business makes up the profitable activities. The IRS mandates that the earnings of a credit counseling agency that is non-profit is limited so that the profits will not benefit any entity of the organization. Ameridebt is the best known example of this type of abuse, and was shut down by the FTC a few years ago.
The most common violation of non-profit regulations among these types of debt relief companies is in the form of earnings. The companies are not supposed to be profit-driven, and yet many directors were earning nearly half a million dollars annually as a salary. There are for-profit companies with directors that don't earn that much. The companies could charge steep fees, take a large portion of payments to creditors for their own services, and work with other companies to get kick-backs when they referred customers to a certain program or company for debt relief or credit assistance.
Some companies get away with the profits simply by funneling the profits into a profitable company. Look at Ameridebt: they funneled their profits into DebtWorks, which was a for-profit business where they made more money, and were able to do so legitimately. Some companies hire telemarketers to enroll consumers in various programs, charging astronomical fees and calling their services ‘charitable'. There are so many ways that credit counseling companies have gotten around their non-profit status to make a buck, which is why you always need to be careful when signing up for programs with companies that claim to be non-profit.
If you want to learn more or if you need debt relief solutions, contact Epic Debt Relief at 877-971-3232.
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