West Virginia Attorney General Patrick Morrisey's office announced Wednesday that his office reached an approximately $1.2 million settlement with Fast Auto Loans Inc. and Virginia Auto Loans Inc. over their debt collection practices.
The companies were accused of threatening prosecution to collect debts, charged excessive interest rates and failed to follow the law in seizing consumers' vehicles. Car title loans are banned in West Virginia.
As part of the settlement, the companies agreed to close all accounts and zero-balance any debt owed by West Virginia-based consumers within 60 days. The companies also agreed to return any vehicles that were seized from West Virginia consumers that have not yet been sold and remove any and all liens on vehicle titles.
They agreed to pay $450,000 total to the state and cancel approximately $816,000 in consumer debt.
The settlements were reached in Jefferson County (W.Va.) Circuit Court.
West Virginia sued Fast Auto Loans and Virginia Auto Loans in 2012, alleging the companies engaged in conduct that violated the West Virginia Consumer Credit and Protection Act. The suit alleged, among other things, that the companies abused and harassed consumers by calling them at home and/or work, and disclosed, without any legal justification, the consumers' debts to people listed as references.
The suit also alleged that consumers were coerced into relinquishing possession of their vehicles by false threats of arrest and criminal prosecution. The companies had seized 218 cars from West Virginia residents, according to records the companies provided to the state.