BOSTON - The state Senate on Monday approved legislation sponsored by Sen. Frederick Berry (D-Peabody) and Sen. Therese Murray (D-Plymouth), that aims to protect consumers who suffer massive penalties and ruined credit.

The legislation aims to protect citizens from unlicensed consumer credit counselors.

“There have been countless individuals taken advantage of by credit counseling agencies who are operating illegally in Massachusetts,” Berry said. People turn to these agencies looking for help and end up in worse financial shape than when they started.”

According to Murray, Massachusetts is one of only six states that does not regulate or license credit counselors. Presently, three out of four agencies are conducting business illegally. The only mandate for credit counselors in the state is that they are a non-profit or an attorney based in the Commonwealth.

Many of the businesses accept customers’ money, but do not help pay off their debt. According to Berry, “This fraudulent activity has resulted in victimized consumers facing penalties, past due bills, and ruined credit.”

The Berry-Murray legislation will:
-Establish a five member Board of Credit Counselors within the Division of Professional Licensure.
-Require background checks, government audits, licensing, and tight regulation of credit counseling agencies.
-Set and administer the penalties for fraudulent and deceptive practices.
-Produce a list of credit counseling agencies, which will be made readily available to consumers shopping for an agency.

“By regulating the credit counseling industry, it is my hope to protect and establish safeguards for consumers. Credit card and other types of debt are exceptionally high right now, making consumers searching for credit counseling services particularly vulnerable to fraudulent practices,” Berry said.