Collections&CreditRisk.com has posted an article about an interesting case. West Virginia Attorney General Darrell McGraw has sued the credit card company Capital One and four other similar companies for “unconscionable conduct in connection with their credit card lending and collection practices.”
McGraw is claiming that Capital One tricked customers 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.
New credit offers were sent to customers who had charged-off accounts and whose payments had been already deemed uncollectable. The new offer had people paying on old debts in exchange for higher credit limits on their card by transferring the debt to Capital One. Along with the higher credit limit, Capital One instigated a slew of late fees, over the limit fees and interest rates.
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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