Bank Gets Taken To Court For Bad Business

Credit card issuer Capital One Bank and four other companies were taken to court

by West Virginia Attorney General Darrell McGraw for unfair and deceptive practices and bad business conduct. The complaint was recently filed in West Virginia's Circuit Court and it says that Capital One conned customers into repayment plans by mailing out solicitations disguised as new credit offers.

Capital One made an offer to give customers one dollar of new credit if they agreed to shift the entire balance of a charged off account to the new credit card. This means that Capital One could re-age debts to get around the statute of limitations, which would start anew.

According to the case, Capital One issued cards with limits as low as 200 dollars for low-income consumers with bad credit histories. The cards carried membership fees of up to 59 dollars per year. Generally, the annual fees were billed on the consumer's second monthly statement, leaving the consumer with just 141 dollars of credit when they thought they had 200 dollars. Then, if the consumer mistakenly exceeded the limit, they could face over the limit fees of up to 29 dollars.

In recent months, McGraw's office has gone after debt collection companies in part of an effort to protect West Virginia's consumers. In November his office sued two payday lending firms and four collection agencies.

As members of the collection industry, we may scratch our heads and wonder why, in an economy that is doing poorly and where debt is running rampant, we cannot collect the money that consumers owe. Experts allege that with unemployment rates running so high, it is impossible for consumers to repay their debts. But bad business practices are not going to help the situation either. It may be a knee jerk reaction to try to con consumers out of money, but it is just that. A knee jerk reaction.

by: Mallory Megan

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