The Senate Permanent Subcommittee on Investigations, following up on prior hearings and recommendations, has released a bipartisan report critical of credit counseling industry practices. The report also calls for a number of reforms. "Over the past several years, the credit counseling industry has seen the emergence of new and aggressive credit counseling agencies," said Subcommittee Chair Norm Coleman (R-Minn.). "The practices of these new agencies resulted in consumer complaints of excessive fees, pressure tactics, nonexistent counseling and education, promised results that never come about, ruined credit ratings, poor service and in many cases being left in worse debt than before they initiated their debt-management plan," he added. Subcommittee Ranking Member Carl Levin (D-Mich.) noted that the IRS and FTC have targeted some of the worst offenders. The subjects of the prior investigation—Cambridge Credit Counseling, The Ballenger Group and Amerix—have each adopted more consumer-friendly practices as a result of subcommittee investigation. Enforcement action by the FTC resulted in the closing of AmeriDebt Inc.

The subcommittee's new report makes further recommendations to protect indebted and vulnerable consumers: (1) the IRS and FTC should complete their cleanup of those in the industry who have been violating nonprofit rules or using deceptive trade practices; (2) the IRS should require each credit counseling agency to submit to a recertification of the agency's nonprofit status every five years; (3) each counseling agency should provide affirmative financial education as a way to reduce default and bankruptcy rates; (4) major lenders should financially support the credit counseling agencies and screen agencies to ensure they provide appropriate services at a reasonable fee; (5) federal standards should be clarified, in coordination by the IRS and FTC, so that each agency maintains standards for accreditation, an independent board of directors, and discloses any relationship between the agency and creditors; (6) insist on reasonable fees based on actual agency costs; (7) forbid commissions based on the number of consumers enrolled in debt management plans.