Complain about a product or service

West Virginia Sues Capital One

May 10, 2005
West Virginia Attorney General Darrell McGraw has filed suits to enforce subpoenas issued to Capital One Bank, a Virginia bank that markets and issues credit cards to West Virginia consumers.

Capital One • Low limit, high fees • Unauthorized account • Trouble closing account • Payoff plans • Identity theft • Fraudulent transactions • Late posting of payments --- News • Capital One Interest Rate Hikes Anger Customers • Capital One Buys Cash-Rich Chevy Chase Bank • Capital One Shuts Down Mortgage Unit, Will Cut 1,900 Jobs • Capital One Hikes Interest Rates, Agrees to Disclose Credit Limits • Capital One Blitzes Credit Reports Looking For New Prey • Capital One Harms Credit Scores by Withholding Data, Suits Charge • Capital One Buys North Fork Bank • WV Sues Capital One for "Deceptive and Illegal" Practices • WV Subpoenas Capital One Records

McGraw previously issued subpoenas to these corporations in connection with investigations of their marketing and servicing of credit cards and other products and services, and debt collection practices.

The attorney general began investigating Capital One Bank and Capital One Services after receiving numerous complaints concerning Capital One Bank's credit cards.

Some consumers complained that they received pre-approved offers of credit that advertised credit limits of up to $5,000, but received cards with limits of $200 or $300. Consumers also complained that these low limit cards had very high fees: a $59 annual membership fee, a $29 late fee, and a $29 over-limit fee.

Consumers who charged amounts close to the $200 limit the first month would already be over limit when they received their first statements because of the $59 annual fee.

Some consumers quickly realized they could not afford to keep the card because of the high fees and high interest rates. Consumers who tried to cancel their cards were told they could not cancel so long as there was an outstanding balance.

In the meantime, late fees, over-limit fees, and interest continued to accumulate even after the consumers tried to close their accounts. Paying their minimum monthly balance did nothing to reduce these consumers' balances.

McGraw says other products were marketed to consumers when they called to activate their new credit cards. These products included a "Payment Protection Plan," a credit disability/unemployment insurance. This product was sold to consumers who were never eligible to receive its benefits because they were already disabled and unable to be employed.

Consumers also complained that Capital One Bank's advertising regarding interest rates for transferring balances to new credit card accounts was misleading.

"Consumers must read every bit of fine print in credit card solicitations and cardholder agreements," McGraw said. "Many companies advertise low fixed rates for the life of the balance but only disclose in fine print that this is true only so long as the account remains in good standing. Making a single payment just one day late, going over the credit limit, or having a returned payment may put the account in bad standing. When that happens, the bank raises the interest rate on the account to a high penalty rate."

McGraw's suit also names Capital One Services, Inc., a Delaware corporation that services the credit cards issued by Capital One Bank.

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