By Michael Miner
Terry Ruffolo succeeded as a publicist beyond a publicist's wildest dreams. He's marketing director of the Consumer Credit Counseling Service of Greater Chicago, certainly not a name on many lips. But thanks to Ruffolo, CCCS began showing up weekly in a Chicago Tribune column. The columnist doted on Ruffolo's boss, quoting her constantly as an expert in her field.
How did Ruffolo pull off this coup? He didn't just schmooze the columnist, he was the columnist.
The Tribune hired Ruffolo last April, thinking he'd perform a public service. And he probably did. He called his column "Credit Watch," and his service to readers was to lead them away from unmanageable debt. Asserting his bona fides, if not his objectivity, each week the Tribune dutifully noted Ruffolo's position with CCCS--which it benignly described as "a non-profit community service organization that provides credit counseling and credit information."
Surely credit counseling in this wanton age is holy work. And the 1,100 CCCS offices across America do well enough by the nation's desperate debtors that Ann Landers herself has recommended them. But these nonprofit offices aren't kept afloat by the grateful dollars of their clients or by United Way. They are sustained by "fair share" donations from creditors, the very creditors they instruct those clients to repay. And representatives of those creditors sit on the CCCS boards.
On July 4 a Chicago attorney named Adam Goodman put the worst possible face on this arrangement. He wrote a letter to the Tribune that said this:
"CCCS is, in actuality, a franchisee of NFCC, the National Foundation for Consumer Credit, which is a joint venture run by a variety of banks and retailers who issue credit cards. While NFCC and its CCCS franchisees are nominally not for profit, the investors in CCCS have a strong financial interest in discouraging customers of CCCS franchises from filing for bankruptcy. This is the only real purpose of CCCS. CCCS has no interest whatsoever in giving its customers objective financial planning advice because it is paid royalties by the investing banks and retailers for each customer it signs up and induces to comply with a CCCS payment plan. CCCS advice is designed to further the interests of the banks and retailers who invest in CCCS and not the customers."
And why are so many people in so much debt to begin with? In his letter Goodman pointed out that those same CCCS investors "send out millions of unsolicited, preapproved credit card applications every day." In conversation with me, Goodman elaborated. "There's been a tremendous explosion in sending credit card applications to people totally undeserving of credit card applications by any rational standard." As a result, "there have been a million consumer bankruptcies a year for the past several years....The CCCSes' primary purpose, in my opinion, is to dissuade people from filing for bankruptcy."
This is partisan rhetoric. Goodman happens to be a litigant in federal class-action lawsuits against the CCCS of Connecticut, the NFCC, and creditors that include Discover Card, Citicorp Credit Services, Sears Roebuck, and J.C. Penney. One suit actually accuses these defendants of "racketeering." It accuses "major creditors" of favoring CCCS counselors over independents. It accuses CCCS of Connecticut counselors of steering clients away from bankruptcy no matter what, of failing not only to question suspect debts but even to inform clients that they didn't perform this service, and of misleading clients "that they will have a good credit rating" if they use CCCS counselors. It asserts that "at all relevant times, NFCC's board of directors was under the effective control of credit grantors."
A few months ago the Federal Trade Commission looked more coolly at the NFCC and concluded it plays two roles. For the public it provides debt-management services; for creditors it collects debts. Regardless of whether these roles are irreconcilable, the FTC announced, debtors entering CCCS offices deserve to know they "receive the bulk of their funding from creditors."
In March the FTC set out a new policy. From then on the public would have to be told that the debt-management plans CCCS counselors draw up are tailored to meet not only clients' needs but "the requirements of the creditors who fund the offices."
Goodman pointed to this policy change in his letter to the Tribune. As CCCS franchises must now "disclose the fact that they are funded by banks and retailers in their paid advertising," he wrote, "at minimum, the Tribune should force CCCS to do the same in the free advertising the Tribune provides CCCS."
Ruffolo got the column in the first place, financial features editor Jack Wade told me, because he knocked on the door at the right time. Jim Mateja's car column was moving to a new section, and Friday's Your Money section had a hole to fill. Ruffolo debuted April 11, writing under the banner of CCCS.
His first piece described a new federal law arming consumers against scamming companies that claim to clean up credit ratings. He quickly introduced his resident expert. "Catherine Williams, president of the Consumer Credit Counseling Service of Greater Chicago, says: 'Consumers must be better informed to the fact that they can generally correct any errors in their credit report themselves.'"
A week later Williams's counsel occupied seven paragraphs of Credit Watch; she was back again the week after that. Williams turned out to be such a constant visitor to Ruffolo's column that eventually his editors told him to develop other sources. Nevertheless, the August 1 column quoted Williams throughout.
It would be his last. The letter of complaint Goodman sent the Tribune in July hadn't been published, nor had it been shown to Wade. Last week I faxed Wade my copy of Goodman's letter. Wade immediately suspended the column, and after asking Ruffolo for information on CCCS he killed it.
"We thought we had a couple of conflict-of-interest areas there," Wade told me. "One of which was the fact Terry quoted his own organization so much. That we could have gotten around--we asked him and he said he would start getting other sources. That was less important than the fact CCCS essentially wouldn't exist if not for the funding of its major creditors....We can't afford to put our credibility in jeopardy."
Terry Ruffolo refused to comment on Adam Goodman's letter. He passed the buck to Catherine Williams, who said she'd submit written responses to my written questions. But then she was taken off the case. At midday Tuesday, past my deadline, I heard from Ken Scott, an NFCC flack in Houston. He'd taken over, and he asked me to send him Goodman's letter so he could get up to speed. I told him Williams already had it. A few more hours went by, and Scott called back with some good news: Durant Abernethy, national president of the NFCC, was standing by in Silver Spring, Maryland.
"The bottom line is," said Abernethy, "is he [Goodman] demonstrates the normal lack of knowledge of how we're structured and how we operate and the usual narrow bias I expect to get from bankruptcy attorneys. [Which Goodman isn't.] To nutshell it for you, we've been around almost four decades. Each one of our members is a community-based nonprofit education foundation. The suggestion these independent organizations are franchised by NFCC is totally incorrect. They are totally independent. Their association with us is voluntary on their part.
"It is true that the majority of their funding comes from contributions made by creditors. It is true the creditors make those contributions because they recognize we help consumers figure out ways to avoid bankruptcy. So it's a win-win situation. We will collectively counsel face-to-face over 1.3 million households this year. Only 32 percent of those people will choose to go on a debt-management plan--where we get concessions from the creditors. The key point I'm trying to make here, when you do the math, is all of the funding is through this debt-management plan. So we counsel another two-thirds of the folks virtually free, or for a very low fee--maybe five bucks. We put on last year about 55,000 free education programs for consumers around the country, from kindergartners to elderly. The full range of educational stuff. We have partnerships with the Red Cross--many other organizations--to do crisis counseling. If our incentive was, as he suggests, to steer people to make payments through us so we make money, we must be failing miserably, because we only get a third of the people."
Do you ever recommend bankruptcy? I asked.
"Only about a tenth of the people we counsel will file bankruptcy in the next year," Abernethy said. "They all come in scared to death that bankruptcy is where they're headed." About 7 percent of them, he went on, "are beyond our help. These 7 percent are referred to legal advice. We try very hard not to suggest bankruptcy, but these people know what we mean when we tell them they need legal advice."
The suit says creditors favor CCCS counselors. "Our survey shows 82 percent of creditors cooperate with other than NFCC members," Abernethy said. "The fact is, some of the people who filed that lawsuit have grown beyond their wildest imaginations the last few years. The largest counseling service in the country right now is not a member of the NFCC."
The Tribune has begun zoning the dead. Expanding its obituary section from two pages to three, it's established a pecking order: one page of obits of national and international importance, another page of metropolitan importance, and a third of local importance. This page changes with location, carrying one set of obits in the northwest suburbs, another in Du Page County, and a third in the rest of the Chicago area. Don't bother reading your obit when you die; the page it's on will tell you how much you mattered.
"I pushed to expand the obits," chief obituary writer Kenan Heise told me. "Down the line there was no choice." The obits share space with the paid death notices, whose number was growing. Heise argued that if the Tribune didn't add a third page of necrology the death notices eventually would squeeze the obits out altogether.
The obit section was expanded with Heise's blessing, but the muscle behind the change was provided by the Tribune's new publisher, Scott Smith. Some reporters didn't keep their annoyance to themselves; they complained that Smith was micromanaging and taking away a page that had belonged to real news.
"That position is because of a perception that this is not part of news," Heise told me. "But it's a part of news to some people. It's a very heavily read news page. There's annoyance because it's change, first of all, and secondly it involves them where they hadn't been involved in the past."
In other words, for the Tribune to publish more obits, more reporters have to write them. Few reporters consider writing obits time loftily spent.
Heise, one of the few, pointed out that obits are the place where a newspaper can stand head and shoulders above its competition. "TV can do better with Jimmy Stewart," he allowed, but when most people die, be they corporate presidents or homeless mendicants, "nobody can touch us. You can't touch a newspaper, especially the Tribune, with its resources, staff, and clipping file. They can't do it on-line, on CLTV, or radio, or TV. On a day-to-day basis we can beat the hell out of everybody else." o
Art accompanying story in printed newspaper (not available in this archive): Adam Goodman photo by Jon Randolph.