1 in 5 Weren’t Told Before Enrolling That Their Creditors Pay Their Credit Counselor, New Survey Finds: What Regulators Found and What Still Goes Undisclosed

1 in 5 consumers (21%) who spoke with a credit counselor were not told about creditor-paid “fair share” payments before enrolling or considering enrollment, and 13% were never told at all, according to a 2026 Debt Disclosure Project/Harris Poll survey of 1,504 U.S. adults who enrolled in or seriously considered a DMP in the past five years. Fair share is a percentage of each consumer payment that the creditor returns to the agency, and no federal law requires a credit counseling agency to tell consumers about it.

That gap has a history. Has the nonprofit label in credit counseling ever been formally investigated for consumer harm? Yes. Between 2003 and 2006, a Senate subcommittee, the IRS, and the Federal Trade Commission each examined the industry, and Congress rewrote its tax rules in response. This guide follows that record and the question it left open: who pays for the debt relief advice a consumer receives.

Credit Card Companies Founded the Counseling Agencies

According to the Federal Reserve Bank of Minneapolis, major card issuers established the earliest nonprofit counseling agencies in the early 1950s to reduce defaults among their own cardholders [1]. The industry was founded to serve creditors’ interest in being repaid. The National Foundation for Credit Counseling (NFCC), the industry’s largest network, marks its 75th anniversary in 2026

Agencies that administer debt management plans are paid three ways: a setup fee, a monthly fee, and “fair share” payments from creditors; some also receive grants. In a debt management plan (DMP), the agency collects one monthly payment, distributes it to creditors, and receives a portion back. The Senate Permanent Subcommittee on Investigations reported that this fair share historically ran 12% to 15% of what creditors received; by 2011, the Minneapolis Fed put it at 5% to 10% of the monthly payment. Fair share revenue exists only while a consumer is enrolled and paying. Counseling that ends without a plan produces none of it. That share comes out of the consumer’s own monthly payment, for as long as the plan runs. On a $30,000 balance, a DMP at its default runs $650 a month for 58 months; at 5% to 10%, $33 to $65 of each payment returns to the agency, on top of the setup and monthly fees the consumer pays directly.

One former enrollee in the same survey put it this way: “I was informed through this app that they get a percentage back through me paying monthly so something seems odd about that… Being paid monthly through the same creditors we made a deal with, it kind of sounds like playing both sides of the fence.” (Man, 49, Arizona, former DMP enrollee)

The FTC’s AmeriDebt Case File

The FTC’s case against AmeriDebt, Inc. is the most detailed primary record. Its 2003 complaint alleged that AmeriDebt claimed nonprofit status while funneling profits to for-profit affiliates, enrolled customers in DMPs rather than counseling them, and kept each client’s first payment as its fee. The 2006 settlement permanently barred founder Andris Pukke from the industry and directed his assets into a redress fund of up to $35 million.

One AmeriDebt client told the Senate: “Because AmeriDebt said it was a non-profit, I thought I could trust them” [3]. The Subcommittee found that nonprofit status often lowered consumers’ scrutiny of both the plan and the agency.

What the IRS and Senate Found

At the Senate hearing on March 24, 2004, IRS Commissioner Mark Everson testified that some organizations were providing “debt management and not credit counseling”. The Subcommittee’s April 2005 report, S. Rept. 109-55, documented for-profit affiliates drawing revenue from nonprofit agencies, including contracts requiring agencies to enroll at least 30% of callers in DMPs.

The IRS examined 63 organizations representing 56% of industry revenue and revoked, terminated, or proposed revoking exemption for 41, representing 41% of revenue. Of 110 new applications, only three were approved. Its Executive Summary called many organizations “mere sellers of debt-management plans” serving related for-profit businesses, officers, and directors.

In the organizations the IRS examined, where revenue depended on enrollment, enrollment displaced counseling; that was the central finding of the IRS compliance initiative [5][6].

The Federal Record on Credit Counseling

Source: Minneapolis Fed, 2011; NFCC; S. Rept. 109-55; IRS Summary of Results and Executive Summary, May 15, 2006; FTC; 26 U.S.C. § 501(q). “Not approved” includes 58 applications closed for nonresponse.

What 501(q) Changed and What It Did Not

Congress added Section 501(q) to the tax code in August 2006, conditioning exemption on the rules below.

Source: 26 U.S.C. § 501(q), Cornell Legal Information Institute. Disclosure row reflects the statute’s text only, not state law.

The board rule limits creditors rather than excluding them. The statute requires a fee policy but does not require disclosure to consumers of how an agency is funded. For-profit debt settlement companies that sell by phone are held to a stricter federal standard: the FTC’s Telemarketing Sales Rule requires them to disclose their fees and how long results will take before a consumer enrolls, and bars them from collecting any fee until a debt is actually settled. Bona fide nonprofits are exempt from that rule. The disclosure gap shows up in consumer experience. In the same survey, 27% of consumers who spoke with a credit counselor wish they had been told how the agency earns revenue and whether that affects the options presented, and 22% of those 55 and older were never told about fair share, roughly double the rate among those under 55 (12%) [11][12]. Public filings make it difficult to verify the 50% cap. Form 990 reports revenue in broad categories and includes no standard line for creditor payments tied to debt management plans.

Who Sits on the NFCC’s Board Today

As of October 2026, executives from Wells Fargo, Citibank, JPMorgan Chase, Capital One, and Synchrony hold 6 of 17 seats on the NFCC’s Board of Trustees. Two lead collections: Capital One’s Managing Vice President, Head of US Card Collections & Recoveries Strategy and Operations, and Synchrony’s Senior Vice President, Global Collections, Recovery and Operational Solutions.

Two of those seats are held by executives responsible for card collections, the creditor category from which fair share payments originate.

The record covers agencies examined between 2003 and 2006. It does not establish that any agency operating today exceeds the creditor-revenue cap or misleads consumers, and this guide makes no such claim. It shows only that the public record cannot confirm compliance either way.

Frequently Asked Questions

Has the government ever investigated credit counseling agencies for consumer harm?

Yes. The IRS revoked, terminated, or proposed revoking exemption for 41 of 63 organizations it examined, the Senate published S. Rept. 109-55 in 2005, and the FTC settled with AmeriDebt’s founder in 2006.

Does nonprofit status mean an agency acts in my interest?

No. Credit counselors are not fiduciaries: nonprofit status is a tax designation and creates no legal duty to act in the consumer’s best interest, and it does not establish that advice is impartial, that a program is the cheapest option, or that alternatives were evaluated. In 2006, the IRS described many reviewed organizations as “mere sellers of debt-management plans” that appeared “motivated primarily by profit”.

Do credit counseling agencies have to tell me how they are paid?

No. No federal law requires a credit counseling agency to tell consumers how it is paid, including fair share; Section 501(q) contains no consumer disclosure requirement, and the one federal disclosure rule applies only to agencies that choose to seek approval for pre-bankruptcy counseling, a service many agencies do not offer. Public filings do not show what share of an agency’s revenue comes from creditors either, so ask any agency directly before you sign.

Conclusion

The record shows what regulators required of agencies, and what they left out: no federal law requires a credit counseling agency to tell consumers how it is paid. In the 2026 survey, nine in ten consumers who met with a credit counselor wish they had received more or better information on at least one topic. Consumers deserve to know how the recommendation they receive is paid for.