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NFCC's New Consumer Disclosure Guidelines

The nation’s oldest and largest non-profit credit counseling organization has announced new policies to ensure consumers receive consistent information about the debt repayment programs offered by its members. The policies — developed with the assistance of the Federal Trade Commission — expand the organization’s comprehensive quality assurance mechanisms.

The new policies provide consuemrs who seek assistance to resolve their financial difficulties with information about how repayment programs, known as Debt Management Plans (DMPs), work. NFCC members in 1,200 communities nationwide will use uniform explanations to help consumers understand how the non-profit agencies are funded, the counselors’ roles both in developing repayment programs that address consumers’ needs buy that also meet the requirements of the creditors, and prediciting an accurate number of months a proposed repayment program will last. One-third of the consumers who receive budget counseling from NFCC members choose to repay debts through a DMP administered by the non-profit organization.

“The NFCC policies are one more example of our non-profit members ensuring quality in their community services,” said Durant Abernethy, president, NFCC. “At a time when more than one million consuemrs are turning to credit counseling assitance annually, it is more important that ever to solidify what was already prodcedure in our agencies and ensure uniformity among members.”

NFCC-member non-profit agencies adhere to quality standards that differentiate them from other credit counseling organizaitons. For example, NFCC counselors earn certification through an NFCC testing program; agencies complete an operational reveiw recognized by the Council on Accreditation of Families and Children; and agencies conduct annual audits of operating funds and client trust accounts. Also, NFCC members commit resources and personnel to community education programs on topics such as credit and budgeting, provide consumers with a written assessment following a counseling session, and verify that debts included in a repayment programs can be liquidated within a specific time period.

“I challenge every credit counseling organization to clearly and candidly explain how it is funded and how its programs work,” Abernathy said. “Furthermore, I encourage consumers to ask the credit counseling organizations they visit about the qualifications of its counselors, its accrediting bodies, and its efforts to educate the community.”

Last year, NFCC members conducted more than 45,000 community education programs and provided more than 975,000 confidential counseling sessions to families and individuals.

The policies demand that NFCC members include, in writing, on printed materials such as brochures and agreements involving debt repayment programs their funding sources and the dual roles of counselors in designing repayment pograms. Also, NFCC members must provide consumers intiating such a program a reliable estimate of the length of time it will last. The policies take effect on June 1, 1997.

The telephone number of the nearest NFCC member may be found in the business pages of the local directory under “Consumer Credit Counseling Service,” or by dialing 1-800-388-2227. Spanish speaking consumers can call 1-800-682-9832. Consumers can also learn more about visiting the NFCC Home Page at

The Disclosure Guidelines Issued by NFCC
The following disclosure and explanation will be made in writing to all clients counseled by member agencies:

Most of our funding comes from voluntary controbutions from creditors who participate in Debt Management Plans (“DMP”). Since creditors have a financial interest in getting paid, most are willing to make a contribution to help fund our agency. These contributions are usually calculated as a percentage of payments you make through your DMP – up to fifteen percent (15%) of each payment received. However, your accounts with your creditors will always be credited with one hundred percent (100%) of the amount you apy through us and we will work with all your creditors regardless of whether they contribute to our agency.

The following disclosure will be made in any written material for consumers which discuss DMPs:

Our DMPs serve the dual role of helping you repay your debts and helping creditors to receive the money owed them.

NFCC also adopted the following policy:

Member agencies must provide to each client enrolling in a Debt Management Plan (“DMP”) a reliable estimate of the length of time it will take to complete the DMP. This estimate must be provided in writing and identify: all the cleint’s debts that are included int he plan; the total debt owned to each creditor; the progposed payment to each creditor; and the anticipated number of months to liquidate the debt. This estimate must be provided prior to the receipt of the clients’s first deposit to the agency.

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