AG's office touts benefits of consumer protection suits

By Lawrence Smith | Jan 19, 2012


CHARLESTON – Officials with the state Attorney General's Office told a state Senate panel a recent settlement for nearly $10 million against a credit card company is but one of the ways the office is benefitting the state financially.

Appearing before the Senate Finance Committee on Jan. 18 was Chief Deputy Attorney Fran Hughes, Managing Deputy Attorney Barbara Allen and the Office's comptroller, Joe Clay. The trio was on the Committee's agenda to brief it about the AG's 2012-13 fiscal year budget.

The AG's office, Clay said, is one of four state agencies which returns more money to the state than what it receives in appropriations. According to Clay, for every $1 it received, the AG returned $26 to the state.

That was partially was enabled by lawsuit settlements through the Office's Consumer Protection Division. Last fiscal year, the Division closed 8,256 complaints, and brought in $4.7 million in settlements.

The settlements included ones against Johnson and Johnson, AstraZeneca, debt settlement companies and pay-day lenders. According to Clay, 114 cases have been brought against pay-day lenders since 2006, including five that resulted in a settlement totaling $329,000 last year.

Toward the end of the 35-minute presentation, Hughes announced that two weeks ago the AG's Office reached a settlement with Capital One in a consumer protection suit. Capital One, Hughes said, agreed to make restitution of $9.5 million.

The settlement, according to Hughes, is the first against the company by any attorney general in the nation. It came, she said, following legal battles in "three federal courts, to the West Virginia Supreme Court twice and two circuit courts over six years."

"It was a long slog," Hughes said.

When asked by Sen. Mike Hall, R-Putnam, about why the AG brought suit against Capital One, Hughes said it involved the company's deceitful use of a payment protection plan and other ancillary services between 2001 and 2006. The suit, Hughes said, alleged Capital One violated state law by not only charging interest on the plan, but also carving out so many exclusions for its use.

"It made it so it was totally meaningless, and you couldn't avail yourself of the benefits," Hughes said.

From the settlement, Hughes said $1 million went into the AG's consumer recovery account to aid in paying the debts attributable to the lawful fees of the 900 people who filed complaints. The remainder, she said, is to be used as the Legislature sees fit.

"The court order says it is to be used for financial relief for West Virginia citizens," Hughes said. "And that gives you an opportunity to take that money and do what you think is necessary to help West Virginia consumers."

"Other than that," Hughes added, "there are not any restrictions on the money."

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