McGraw settles with collection agencies for more than $700,000
Jessica M. Karmasek Jun. 6, 2012, 7:30am
CHARLESTON - West Virginia Attorney General Darrell McGraw announced Wednesday that his office has reached settlements with five out-of-state debt collection agencies, netting more than $700,000 for state consumers.
The five companies are Frontier Financial Group of Henderson, Nev.; United Debt Holding of Castle Rock, Colo.; Skutr Financial of Las Vegas; USCB Corp. of Archibald, Pa.; and Mauconduit and Luna of Hapeville, Ga.
Under the agreements, the companies are required to pay a total of $772,286 in refunds and cancelled debts to settle charges that they engaged in unlawful debt collection in West Virginia.
"State laws and regulations governing collection agencies are intended to protect both consumers and legitimate creditors from fraud and abuse," McGraw said in a statement Wednesday.
"The Tax Department has made it clear that debt buyers who buy charged-off debts for collection must comply with collection agency laws."
The attorney general began investigating the companies after receiving complaints that four of them were not licensed in the state and that all five were collecting illegal Internet payday loans.
Oak Hill resident James Shuff filed a complaint against Frontier Financial.
Shuff said he knew there was a problem when he received a letter from the company demanding payment of a $615 debt to Money and More, an Internet payday lender based in California.
Because of information previously provided by the attorney general's Consumer Protection Division, Shuff knew the debt had been canceled and Money and More had been banned from doing business in West Virginia.
McGraw's investigation would later confirm that Frontier Financial was both unlicensed and attempting to collect Money and More's payday debts. Further investigation disclosed that Frontier Financial was primarily collecting debts for two unlicensed debt buyers also named in the settlements, United Debt Holding and Skutr Financial.
Those companies were attempting to collect on Internet payday loans, illegal in West Virginia, and charged-off credit card debts, according to the Attorney General's Office.
Soon after, McGraw began investigating USCB and Mauconduit and Luna.
Although licensed to collect debts in West Virginia, USCB was found to be collecting charged-off Internet payday loans that it had purchased from various lenders. Mauconduit and Luna, meanwhile, was not licensed to collect debt in the state, McGraw's office said.
"Internet payday loans are harmful to consumers and have never been legal in West Virginia," the attorney general said. "My office will continue to intervene whenever any agency, licensed or otherwise, is collecting unlawful debts here."