The South Carolina Supreme Court recently ruled in favor of the South Carolina Department of Consumer Affairs, who argued that Lexington Law Firm based out of Salt Lake City, Utah was illegally offering credit counseling to citizens of the state. Since the law firm is not licensed to practice law in the state, they must apply for a special license for credit counseling from the SCDCA according to the consumer Credit Counseling Act of 2005. Maria Audus of the SCDCA says this is a victory for South Carolina consumers.
“Those protections were designed because there were a number of abuses in the credit counseling and debt management industry several years ago which prompted the legislature to pass that law,” said Audus. “It’s just really exciting for us to see the Supreme Court uphold the act and see the importance, especially in this economy with consumers turning to credit counselors.
“They need to know that those people are acting according to the law.”
Audus says had the law firm did not practice law in South Carolina, they were not exempt from needing a license for credit counseling. According to Audus, “That what the Supreme Court found and that was our argument as well that they were just offering the credit counseling services and that was their only offering.
“Had they been licensed to practice law in South Carolina and had they actually been practicing law as a regular course of business, then obviosly they would have been exempt.”
The SCDCA now turns its attention to helping those counseled by the firm in retrieving their fees. “We’re in the process of helping them,” she said. “We issued nearly $1.4 million in refunds for consumers under this act since 2006. Here’s another situation, again, where we’re going to go and look and see which consumers were affected by this because, as the Supreme Court found, this organization was not licensed to charge them fees for their credit counseling services.”