VA Attorney General Slams Capital One With Lawsuit For Unethical Business Practices
Credit card issuer Capital One Bank and four other businesses were sued by West Virginia Attorney General Darrell McGraw for deceptive and unfair practices and bad business practices. The complaint was filed this week in West Virginia's Circuit Court and it asserts that Capital One hooked consumers into repayment plans by mailing out solicitations disguised as new credit offers.
Capital One offered to give consumers one dollar of new credit if they agreed to transfer the whole balance of a charged off account to the new credit card. This meant that Capital One could re-age debts to get around the statute of limitations, which would start anew.
According to the case, Capital One issued cards with limits as low as 200 dollars for low-income consumers with bad credit histories. The cards carried membership fees of up to 59 dollars per year. Generally, the annual fees were billed on the consumer's second monthly statement, leaving the consumer with just 141 dollars of credit when they thought they had 200 dollars. Then, if the consumer mistakenly exceeded the limit, they could face over the limit fees of up to 29 dollars.
In the past couple of months, McGraw's office's aim has been to go after debt collection companies in part of an effort to protect West Virginia's inhabitants. In November his office sued two payday lending firms and four collection agencies.
As members of the debt collection industry, oftentimes we may scratch our heads and wonder why, in a suffering economy where debt is running rampant, we cannot retrieve the money that consumers owe. Analysts claim that with unemployment rates running so high, it is virtually impossible for consumers to repay their debts. But bad business practices are not going to help the situation either. It may be a knee jerk reaction to try to con consumers out of money, but it is just that. A knee jerk reaction.
Capital One offered to give consumers one dollar of new credit if they agreed to transfer the whole balance of a charged off account to the new credit card. This meant that Capital One could re-age debts to get around the statute of limitations, which would start anew.
According to the case, Capital One issued cards with limits as low as 200 dollars for low-income consumers with bad credit histories. The cards carried membership fees of up to 59 dollars per year. Generally, the annual fees were billed on the consumer's second monthly statement, leaving the consumer with just 141 dollars of credit when they thought they had 200 dollars. Then, if the consumer mistakenly exceeded the limit, they could face over the limit fees of up to 29 dollars.
In the past couple of months, McGraw's office's aim has been to go after debt collection companies in part of an effort to protect West Virginia's inhabitants. In November his office sued two payday lending firms and four collection agencies.
As members of the debt collection industry, oftentimes we may scratch our heads and wonder why, in a suffering economy where debt is running rampant, we cannot retrieve the money that consumers owe. Analysts claim that with unemployment rates running so high, it is virtually impossible for consumers to repay their debts. But bad business practices are not going to help the situation either. It may be a knee jerk reaction to try to con consumers out of money, but it is just that. A knee jerk reaction.
About the Author:
Mallory Megan is employed bya debt collection agency. She also does pieces on consumer spending, business and finance, and debt collection.
You like it? Share it!
posted by SolveItQuick at
11:53 AM
0 Comments:
Post a Comment
<< Home