Attorney General settles two cases
John O'Brien Oct. 30, 2006, 7:53am
Attorney General Darrell McGraw
CHARLESTON - State Attorney General Darrell McGraw reached two settlements this month, one with a door-to-door seller of Craftmatic beds and another with a Minnesota debt purchaser.
J. Kaz, Inc., of Pittsburgh and its largest finance company, Dent-A-Med doing business as The HELP Card of Arkansas, will pay approximately $570,000 as a result of alleged conduct during their business of selling adjustable beds to the elderly.
In a press release, McGraw's office said it began investigating the companies after receiving a large number of complaints that they engaged in high-pressure sales tactics, like spending several hours in a potential customer's house. One complaint from an 81-year-old Clendenin woman said a salesperson stayed in her home from 3-6:30 p.m. before leaving for dinner, then returned and stayed from 7-10 p.m.
The woman says she gave in and bought a $3,000 bed because the man said he wouldn't take "no" for an answer.
Complaints also said salespersons misrepresented the bed's ability to cure medical problems. McGraw's office says its investigation revealed that Craftmatic obtained the names of consumers' friends and relatives by telling them it was needed contact information for a sweepstakes program, then forwarded the names to its Pittsburgh office to arrange in-home appointments.
It also says Craftmatic had no set prices for the beds, but used bogus $250 reductions to convince customers. Also, the company had an illegal warranty disclaimer and debt collection provisions in its contracts.
McGraw's office began discussions with Dent-A-Med after it learned it was using open-end credit on the credit card it offers that can be used for health-related expenses.
"When the Attorney General's Office spoke with consumers who financed the purchase of the bed, the majority of them did not even know the charge had been put on a credit card. Other consumers reported that they were misled about the terms of financing," the release said.
A total of 465 consumers will receive some kind of relief. They will either have their entire debt canceled, their interest rate reduced from 21 percent to 0 percent or will receive a $1,000 refund. All will keep their beds.
Craftmatic of Pittsburgh will pay $475,000, and Dent-A-Med will contribute $95,000. The settlement was reached Oct. 5.
"After extensive negotiations, I am pleased that we were able to resolve this matter," McGraw said.
"My office will do everything it can to protect the senior citizens of this State."
McGraw proved that a month ago, when he attempted to intervene in a lawsuit on behalf of a group of elderly and disabled citizens who no longer qualified for an in-home nursing care program in a class action lawsuit against the Department of Health and Human Resources.
Had the judge approved his motion to intervene, McGraw's attorneys would have been working both sides of the case. Gov. Joe Manchin settled the lawsuit, giving into many of the plaintiffs' demands, two days after McGraw's motion.
The other settlement, reached with Pinnacle Credit Services, requires Pinnacle to cease collections in West Virginia until it is properly licensed, and that accounts with state consumers will be deleted.
It is alleged that Pinnacle was attempting to collect debts it was not rightfully owed. When investigating, McGraw's office said it discovered the company was not licensed.
Pinnacle estimates the cancelled debt will total more than $1 million, according to a release. The settlement was reached Oct. 27.