The West Virginia Attorney General recently entered into a settlement agreement with Brady and Caruso. The Attorney General was investigating the company for allegedly:

  • Failing to verify a consumer’s debt as required by the federal Fair Debt Collection Practices Act.
  • Failing to be registered or bonded to collect debts as required by West Virginia law.
  • Threatening to place a lien on a debtor’s property if she did not pay a debt. According to the Attorney General, West Virginia law prohibits (i) placing liens on property unless the creditor first sues the debtor and obtains a judgment, (ii) using threats or coercion in debt collection and (iii) threatening that nonpayment will result in the taking of action that requires a court order if the collector does not tell the consumer that it must obtain a court order before taking such action.

Brady and Caruso agreed to refund $9,287.87, cancel $282,953.84 in debt, close all West Virginia accounts, write the accounts down to a zero balance, delete any negative credit reports and not sell the accounts.

Brady and Caruso issued a subsequent press release noting that the West Virginia Attorney General failed to mention that Brady and Caruso was in the process of obtaining a license or that Brady and Caruso had only 170 accounts in West Virginia.

The settlement is the latest action by the Attorney General in his continuing fight against collectors operating in West Virginia. Last year, the Attorney General sued another out-of-state collection agency and entered into settlements agreements with others for allegedly engaging in unlawful and coercive debt collection practices. See our October 8, 2008 Alert.

Contact us for more information on the West Virginia Attorney General’s settlements and efforts and other West Virginia court cases. See, e.g., Watkins v. Wells Fargo Home Mortgage, 2008 WL 4838731 (S.D. W. Va. Nov. 5, 2008) (finding some, but not all, claims of unconscionability against a national bank preempted by the National Bank Act and implementing regulations); Capital One Bank, N.A. v. McGraw, 563 F. Supp. 2d 613 (S.D. W. Va. 2008) (enjoining the West Virginia Attorney General from enforcing subpoenas against a national bank based on the National Bank Act and federal regulations that prohibit state officials from “visiting” national banks).

Michael Tomkies and Charles Gall

DEALING WITH MULTISTATE DEBT COLLECTION COMPLIANCE? We routinely advise on collection-related activities and the regulated activities of creditors, third party debt collectors, debt buyers and loan servicers. We also publish an easy-to-use reference that compiles state and federal laws governing debt collection practices. The Debt Collection Digest is organized topically, includes the federal Fair Debt Collection Practices Act and Commentary for easy cross-reference, and covers ADAD and monitoring and recording statutes. The Digest covers both consumer and commercial collections and includes a detailed analysis of statute applicability, as well as supplemental information such as codes of conduct. Creditors, subsequent holders, third party collectors, debt buyers and loan servicers should find the Digest an invaluable resource for collection program development, management and regulatory compliance. Contact us for details.