March 22, 2005
GENERAL’S OFFICE SETTLES WITH DEBT
Attorney General J. Joseph Curran, Jr. announced today that his
Consumer Protection Division has entered into a settlement with
The Ballenger Group, LLC, 321 Ballenger Center Drive, Frederick,
and its owner, Ballenger Holdings, LLC. Ballenger Group is a for-profit
corporation that provided services in connection with debt management
plans. Under a debt management plan, a consumer makes monthly payments
to a credit counseling agency that distributes the payments to
the consumer’s creditors. In Maryland, only a non-profit
corporation can offer and perform debt management plan services.
The Division alleged that Ballenger Group did not act as a mere "processor" for
credit counseling agencies but, in fact, actually performed debt
management plan services that it cannot legally perform as a for-profit,
and accepted fees for those services that it could not legally
accept. The Division further alleged that Ballenger Group misrepresented
the nature of the debt management plans consumers entered into,
including representing that enrolling in a debt management plan
would only help consumers’ credit when, in fact, enrolling
in a debt management plan can hurt a consumer’s ability to
obtain credit. The Division also alleged that Ballenger Group misled
consumers into believing that the services it was providing were
actually being performed by a non-profit and that the fees consumers
paid were being used to support a non-profit. Ballenger denied
that it was illegally performing debt management services or misrepresenting
its services to consumers.
Under the settlement agreement, Ballenger can only service a debt
management plan negotiated by a credit counseling agency and may
no longer conduct its own negotiations with consumers’ creditors.
The agreement also limits Ballenger’s control over and involvement
in the services provided by credit counseling agencies. Ballenger
Group further agreed not to misrepresent the impact entering into
a debt management plan could have on a consumer’s credit.
Ballenger also agreed not to misrepresent its services to consumers
or to tell consumers that it is a non-profit. Under the agreement,
Ballenger Group will pay restitution of fees it received for debt
management services it performed on behalf of Maryland consumers.
Ballenger has also agreed to pay the Division $30,000 for its costs.
Consumers who are struggling with debt should seek counseling from
a true non-profit credit counseling agency, which can advise consumers
of their options, including whether enrolling in a debt management
plan is the right solution," Attorney General Curran said. "Before
agreeing to a debt management plan, consumers should compare the
fees they are asked to pay with those charged by other credit counseling
agencies and they should also be wary of agencies that pressure
them into enrolling in debt management plans without explaining
all of the available options."