McGraw files suits against four collection agencies

By Kyla Asbury | Jun 7, 2010

CHARLESTON -- Attorney General Darrell McGraw's Consumer Protection Division filed two lawsuits against four collection agencies headquartered in Washington and New York for doing business in West Virginia without a license and violating West Virginia consumer protection laws.

The collection agencies violated the West Virginia Consumer Credit and Protection Act, according to two suits filed June 3 in Kanawha Circuit Court.

Cavalry Portfolio Services, Cavalry Investments, Cavalry SPV and Cavalry SPV II, which are all based in Hawthorne, N.Y., were named as defendants in the first suit.

Cavalry Investments and Cavalry SPV I and II purchased an unknown number of charged-off credit card accounts and filed numerous suits in West Virginia without a license to collect the debts as required state tax department regulations, according to the suit, and have refused to comply with the investigative subpoena issued by McGraw's office.

"Debt purchasers like the Cavalry companies have flooded the West Virginia courts with suits against financially unsophisticated consumers that often end in default judgments, garnishment of wages and liens on homes - even without actual proof of the debt," McGraw said. "In this case, Cavalry has refused to become licensed as a collection agency and failed to disclose its business activities in response to our subpoena."

The second suit argues that Seattle Service Bureau, Inc., which does business as National Service Bureau in Shoreline, Wash., is also unlicensed to collect debts in West Virginia and has added illegal interest, collection fees and other charges to debts allegedly owed by West Virginia consumers.

State law says that except for certain education loans, collection agencies are prohibited from adding fees to the debts they attempt to collect.

"National Service Bureau has refused to cooperate with the efforts of my office to recoup unlawful charges and fees that it has collected from West Virginia consumers for many years," McGraw continued. "We will continue to take any actions that are necessary to protect West Virginia consumers from collection agencies that refuse to abide by our laws."

The Attorney General's Office is seeking compliance with the subpoena and temporary relief to refrain from engaging in any debt collection activities in West Virginia until further or final hearing in both suits. Assistant Attorney General Norman Googel is representing in both suits.

The Cavalry suit has been assigned to Circuit Judge James C. Stucky. The Seattle Service Bureau case has been assigned to Circuit Judge Charles King.

Kanawha Circuit Court case numbers: 10-C-994, 10-C-995

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