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West Virginia Sues Capital One For "Deceptive And Illegal" Practices

July 8, 2005
The State of West Virginia has filed suit against Capital One Bank, a major issuer of credit cards. State Attorney General Darrell McGraw says the company has employed deceptive and illegal practices to market credit cards to consumers in his state.

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

According to the suit, the Virginia-based bank offered pre-approved credit cards with low limits to consumers with poor or limited credit histories or low income. The credit cards carried membership fees of up to $59 per year.

"The entire 'membership' fee was charged on the consumer's first monthly statement. As a result, a consumer with a $59 fee and a $200 limit account had only $141 of credit available the first month," McGraw said.

Many consumers had even less because they purchased other products or services such as a payment protection plan, McGraw's added.

"A consumer with an over-limit balance who made only the minimum monthly payment would never bring his or her account balance back below the credit limit: each monthly payment would reduce the balance to the credit limit; and then each monthly addition of interest would increase the balance so as to exceed the credit limit, again ensuring that the account was never paid off and that charges such as over-limit fees could continue to be imposed," the lawsuit charged.

The lawsuit further accused Capitol One of imposing fees on the accounts, even if the consumers never activated the cards. Consumers who attempted to cancel the cards were told that they could not as long as there was an outstanding balance, the lawsuit said.

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