10:46 AM CST on Thursday, December 1, 2005

By Mark Greenblatt / 11 News

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This holiday season, as you're piling up the purchases, you may want to watch out you don't also pile up too much credit card debt.

It's a company that helps tens of thousands of people buried in debt, in Houston and all over the nation. But is this non-profit company making millions off the people who can least afford it?

Monica Malbrough knows all about it. She charged her debts up so high, she needed help to bring them back down.

How high were her charges? "About $17,000," she said.

Then she saw a commercial for Consumer Credit Counseling Services.

"I got the impression they had this really good relationship with creditors," said Malbrough.

So Malbrough stopped using her credit cards, and started up with CCCS.

"Their program seemed really good. You pay one monthly payment, and they take care of dispersing it to all the creditors," she said.

But she alleges that didn't always happen.

A lot of 'em really weren't getting paid," she said.

She said that hurt her credit, while CCCS negotiated with credit card companies for a better deal.

"They said it's a standard tactic to hold out, and not pay the debt collector," Malbrough said.

What's more, the program was far from free.

"It's supposed to be a $30 monthly fee. I filed a complaint with the Better Business Bureau," she said.

In mediation, that complaint led CCCS and parent company Money Management International to refund hundreds of dollars in monthly fees.

But it turns out, MMI never told Malbrough something very important about those fees. She didn't have to pay them to begin with.

Why not ? MMI's a non-profit company, which means it doesn't pay taxes. In return, the IRS requires them to provide a charitable service. MMI reports on its IRS 990 tax returns that anyone "unable" or "unwilling" to pay the fee is not refused service. It turns out though, this non-profit hasn't exactly been upfront with consumers.

"If the general public knew I think they would be stunned, shocked, disappointed," said Bob Litwin.

Litwin is the former lead spokesman, who left on good terms in 2002 after 12 years of service

"I feel this is one of the most profitable non-profit agencies I know," he said, "The attitude of management has shifted from a service organization to a revenue generating organization."

What does he mean? CCCS used to offer free debt management services. Then, five years ago, it merged with MMI.

Today the company tries to charge $75 to everyone who starts on a plan. After that, it asks for up to $40 a month, without telling clients the fees are voluntary.

"They are making money at the expense of the consumers who are trying to get themselves out of debt," said Litwin.

And Litwin said counselors' jobs are on the line if they don't perform.

"They were under extreme amounts of pressure," he said.

"You're not offering a counseling session, you're selling a debt management service," said Litwin.

Aaron Sluder bought into the program.

"They did say that they had a $30-a-month processing fee that was required," Sluder said.

The company never told him he had an option.

"If I had known that, I would not have been paying them the $30 a month," said Sluder.

And what's more, MMI's audited financial statement lists the fees as "contributions", which Debt Management Plan contributions tally up to over $49 million in 2003.

"I wouldn't voluntarily donate an extra $30 dollars for 60 months when I'm trying to get out of debt. What would be the purpose of that?" Malbrough said.

The city of South Portland, Maine agreed. That's why they pulled CCCS's property tax exemption, arguing the case all the way up to the state of Maine's Supreme Court, and winning.

"The way CCCS was conducting business was not charitable," said Mary Kall, City Attorney for the city of South Portland, Maine.

11 News Defenders listened in as Malbrough called a counselor.

MMI: "The only state that is not required to pay a fee is Ohio, I think."
Malbrough: "Only state is Ohio? So if a person from Ohio is unwilling to pay, they don't have to pay, but because I'm from Texas, if I'm unwilling to pay a fee?"
MMI: "No, no, no, no. What I'm ... it's by law."
Malbrough: "Oh it's by law?"
MMI: "A state fee. All states have to pay, you know."
Malbrough: "Something?"
MMI: "Something."
Malbrough: "There's nothing I can do about it if you say it's the law. Or whatever."
MMI: "Yes ma'am. I mean, I wish I could but, but I mean, that is a fee."

KHOU-TV

Consumers who are deep in credit card debt may have been mislead by a Houston-based credit card company.

"You've been lied to. You've been deceived," said Carol Ritter of the Better Business Bureau, "Boiler rooms, telemarketers. That's how they operate. A non-profit should not be operating in that way."

"There is no state law that I am aware of that forces them to pay that fee," Ritter said.

I a written statement, MMI calls the false claims its counselor made "an isolated incident that has been resolved internally."

But the BBB says they're not so sure about that. "We did see complaints over the years that these people had no money, and yet were still being charged the fee," Ritter said.

"If they're gonna charge that fee, why should you have a non profit status. You're not non-profit," said Malbrough.

So where are at least some of those fees ending up? Ritter says in the pockets of executives.

Records uncovered by 11 News Defenders show three vice presidents make more than $190,000 in salary and benefits every year.

Another two vice presidents at the non-profit bring in more than $290,000.

The company CEO, Ivan Hand, tops out at more than $365,000 a year.

Those salaries tower over the ones we found at much larger charities, like the Special Olympics or Habitat for Humanity.

We should note that MMI declined an on-camera interview for this story.