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Debt relief company to return money to consumers, announces AG Cooper

Release date: 1/11/2005

Cambridge Credit Counseling to give more than $1 million back to NC consumers, change practices


Raleigh: A Massachusetts debt management company accused of illegally charging people high fees to get out of debt must repay its North Carolina customers $1.2 million, Attorney General Roy Cooper announced today.

“This company claimed it was a non-profit, then got rich by taking advantage of people who were already in debt,” Cooper said. “Consumers thought their payments were going to their creditors, not to pay this company’s fees.”

Under the terms of a consent judgment entered Monday by Wake County Superior Court Judge Howard E. Manning, Jr., Cambridge Credit Counseling must begin repaying the money it owes consumers immediately. Cambridge will make payments to the state over the course of 18 months, starting with a payment of $500,000 made yesterday. Cooper’s office will contact consumers who are eligible for refunds.

According to the judgment, those consumers who benefitted least because they were in a debt management plan for the shortest period of time will receive priority in payment. Cooper’s office estimates that at least 2,800 consumers will be eligible for a refund, with an average amount of about $400.


The settlement also prevents Cambridge from doing business with North Carolina consumers as long as the company charges a fee for debt management services. Under North Carolina law, debt management companies cannot charge fees and may use a consumer’s money only to pay his or her creditors.

This judgment resolves a suit brought by Cooper and Wake County District Attorney Colon Willoughby last April that alleged that Cambridge deceived customers and engaged in illegal debt adjusting, the practice of charging consumers fees to negotiate with their creditors to pay off debts. The company failed to clearly advise consumers that the first month’s payment under the debt management plan was kept by Cambridge as an initial fee. Because of this upfront payment to Cambridge, consumers wound up with extra interest and late charges on their outstanding debts.

Cambridge’s 2002 tax returns indicate that it generated revenues nationwide in excess of $53 million that year, spending close to $16 million on advertising alone and paying its founders, brothers John and Richard Puccio, salaries of $624,000 each. Cambridge also funneled money to for-profit subsidiaries controlled by the Puccios. Cambridge is one of the three largest debt management organizations in the country.

“Consumers must be very careful when dealing with these credit counseling groups,” Cooper said. “Just because one of these operations claims to be a non-profit, don’t take their word for it. Make sure the place you turn to for help offers real credit counseling and doesn’t drive you deeper into debt.”

Cooper has directed his Consumer Protection Division to combat unscrupulous debt relief companies. In 2002, Cooper won a $1.7 million judgment against the Daly Law Centers. Last November, Cooper obtained a preliminary injunction against Knight Credit Services, a Fayetteville-based debt management company. In addition, Cooper filed suit last April against another debt adjustor, Debt Management Foundation Services, Inc. of Orlando, Florida. That suit is still pending.

Consumers who need help managing debts may contact a legitimate local non-profit credit counseling agency for advice. One source of information and referrals is the National Foundation for Credit Counseling at 1-800-388-2227 or


Media contact: Noelle Talley (919) 716-6413