West Virginia Attorney General Darrell McGraw's office announced today it has reached settlements with two collection agencies, Allied Interstate of Minneapolis and Jefferson Capital Systems of St. Cloud, Minn., and one debt buyer, Wilhelm, West, Kacey & Associates (WWKA), of Canton, Ga. - all of which were being investigated for wrongful collection practices. The companies agreed to pay restitution and cancel debts totaling $404,091 to 446 West Virginia residents.
Allied Interstate, an agency with offices worldwide, including 15 in the United States, agreed to pay $50,000 to 66 consumers, and for "consumer protection and educational purposes."
McGraw's office had received an "unusual number of wrong person" complaints, meaning the agency was calling individuals concerning debts someone else owed. The company reports it has invested millions of dollars to develop "rules-based collection technology," intended to largely eliminate human error from collection practices. McGraw stated, "Allied's new technology may serve to reduce and, in some cases eliminate, many of the concerns my office has observed in the industry."
The Attorney General's office began investigating Jefferson Capital Systems after receiving complaints that the company was collecting debts on Internet payday loans, which are illegal in West Virginia. The investigation revealed Jefferson Capital conducted a "Fresh Start Solution Program," in which it attempted to collect debts by offering consumers a new credit card, and transferring old debts to the new card after receiving a certain amount of payments.
In the settlement, Jefferson Capital agreed not to offer the Fresh Start Solution Program or any similar options in West Virginia unless it first registers in the state as a credit services company. Jefferson Capital also refunded $97,940 and cancelled debts totaling $77,691 to 260 West Virginia consumers.
Wilhelm, West, Kacey & Associates, a debt buyer, agreed to cancel debts totaling $178,559 allegedly owed by 120 consumers. The company promised to stop collecting debts in West Virginia unless it becomes licensed to do so. WWKA also promised not to threaten lawsuits to collect debts that are past the statute of limitations.
"Consumers should be skeptical whenever a collection agency threatens legal action,” McGraw said, after the settlements were announced. "Many companies who purchase debts that have been defaulted on cannot verify that the debt is actually owed. In the case of WWKA, the debts were so old that the time to file suit to collect them had expired.
Concerning the settlements, McGraw also stated, "Although modern computer technology makes it possible for companies to acquire much information about consumers, often the information is inaccurate. Notwithstanding my concerns about the past practices of these companies, I commend them for cooperating with our investigation and for taking the necessary steps to ensure compliance with our laws in the future."
McGraw's office has been cracking down on collection companies in recent months, Lawsuits Filed Against Four Collection Agencies, Nov. 23, as part of an effort to "halt the victimization" of West Virginia's consumers, according to the office's Consumer Protection Division.
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