West Virginia Attorney General Darrell McGraw sued credit card issuer Capital One Bank and four other companies for deceptive, unfair and "unconscionable conduct in connection with their credit card lending and collection practices," according to his office's Consumer Protection Division.

The complaint, filed this week in Mason County (W.Va) Circuit Court, alleges that Capital One lured consumers into repayment plans by sending solicitations disguised as new credit offers. Capital One agreed to provide individuals $1 of new credit if they agreed to transfer the entire balance of a charged-off account to the new credit card account. The arrangement enabled Capital One, an arm of Capital One Financial Corp., to re-age debts so that the statute of limitations period started new, according to McGraw's office.

"Capital One’s practice of offering nominal extension of credit, if and only if the consumer agreed to pay off a debt too old to be sued on is tantamount to loan sharking," McGraw said in a statement.

The suit alleges that for some low-income consumers with poor credit histories, Capital One issued cards with limits as low as $200. These carried membership fees of up to $59 per year. The annual fees often were billed on the consumer's second monthly statement, which could mean that a consumer had just $141 of credit available on a card when they thought they had $200. If the consumer then inadvertently exceeded the limit, they could face over-the-limit fees of up to $29, according to the suit.

Capital One spokesperson Julie Rakes said the company does not comment on pending litigation.

The suit also names collection agency COSI Receivables Management, and three Capital One collection and recovery units, but does not outline how those companies are at fault. COSI officials were not immediately available.

McGraw's office has targeted accounts receivable management companies in recent months as part of an effort to "halt the victimization" of West Virginia's consumers. In November, his office filed two lawsuits targeting a group of payday lending firms and four collection agencies, Lawsuits Filed Against Four Collection Agencies, Nov. 23.

In the latest lawsuit, the complaint alleges the new credit offers were sent to consumers who had charged-off accounts with Capital One or other creditors, meaning the bank already had written off the accounts as uncollectable. The consumer was required to make payments on the old debt in order to receive increases in the credit limit on their new credit card. By transferring the old debt onto a new credit card, Capital One was able to charge interest, late fees and over-the-limit fees on debt that otherwise would not have been subject to those fees.

The complaint also alleges that Capital One issued multiple low-limit credit cards, each charging high fees, rather than raising credit limits on consumers’ existing accounts. Also that Capital One “unconscionably” imposed over-the-limit fees on consumers’ accounts, sold services to consumers who could not benefit from the services and billed and attempted to collect for credit card accounts that were never activated.

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