HUNTINGTON – Applied Card Systems announced plans to close its Huntington call center, but people following the story say the company's tenuous relationship with state Attorney General Darrell McGraw's office had little bearing on the decision.

The Glen Mills, Pa.-based company blamed market conditions for the decision, adding that it was not "a reflection on the quality of the Huntington associates." About 300 employees are out of jobs as of Friday.

Applied Card processes credit card accounts while parent company Cross Country Bank provides credit cards to people with bad credit histories. Based in Delaware, Applied Card also has operations in Boca Raton, Fla., and Glen Mills. They had been in Huntington for more than seven years.

Last June, Applied Card and Cross Country Bank agreed to pay West Virginia $1.5 million to settle a consumer protection lawsuit filed by Darrell McGraw's office against the companies. The money was to be used to fund consumer education, credit or bankruptcy counseling and education, and conflict resolution programs.

The lawsuit accused Cross Country Bank of deceptive marketing and Applied Card, the bank's collection agency, of using abusive collection methods.

Gerry McDonald, president of the Huntington Area Development Council, said the company's history with McGraw's office wasn't the big issue.

"I don't think it helped," he said. "But I don't think it was the deciding factor. The deciding factor is that the FDIC (Federal Deposit Insurance Corp.), which regulates financial institutions, requires them to have a loan-loss reserve. In Applied Card's case, they issue cards to people with bad credit histories, and the FDIC has increased the loan-loss reserve requirements for them. Applied Card basically has to change business model."

Assistant Attorney General Norman Googel agreed.

"We are certainly sad to see them go," Googel said. "They had renewed their lease and made at least another year commitment. I think we have to take them at face value. It had to do market changes. I really don't know of any other reason.

"I do think it's for the reasons they stated. A lot of the employees weren't that surprised. I'm not really surprised, but I am disappointed. We settled our case last summer. And there was strong information that even before our investigation began, they were planning on closing the Huntington call center."

McGraw's office began investigating the company in 2003 after Applied Card closed its call centers in Beckley and in Russell, Ky. About 40 former workers at the Beckley facility reported violations of the state's consumer protection law.

New York Attorney General Eliot Spitzer won a court order earlier this year forcing Cross Country to pay nearly $9 million in penalties and restitution. In 2005, Minnesota AG Mike Hatch barred Applied Card from collecting debts there. In October 2004, the Federal Trade Commission issued an injunction against the company for deceptive and abusive practices.

For years, Applied Card and parent company Cross Country Bank have fought lawsuits in multiple states, including one filed by West Virginia Attorney General Darrell McGraw, alleging fraudulent debt-collection and marketing tactics.

McDonald now is trying to find another tenant for the 110,000-square-foot building just south of Huntington on W.Va. 152. He said he has shown the property to three companies.

Last June when McGraw and bank CEO Rocco Abessinio announced they have reached a settlement of all claims and counterclaims, McGraw said, "We believe the settlement constitutes a fair resolution of all outstanding claims and we were pleased with the Bank's willingness to stipulate to a permanent injunction that provides substantial protections for West Virginia consumers."

Under the terms of the settlement, the bank and Abessinio did not admit any liability or acknowledge the validity of any claims that were asserted.

"The settlement structure was in keeping with my long-held belief that this office must fight for and educate consumers as to their rights," McGraw said at the time in a press release. "The monetary relief obtained will help fund ongoing consumer education and ensure that West Virginia consumers are well-informed of their rights and the consequences of their actions."

In the joint press release, Abessinio said, "The resolution of this case will allow us to focus on our core goal to provide financial opportunities for consumers who lack access to traditional credit markets. I know our employees in West Virginia and other states will be very pleased to have this lawsuit behind us."

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