As thousands of consumers discover each year, shady companies that promise to get rid of your credit card debt always fail to deliver. It turns out that getting rid of that debt is a lot harder than they say.
Your state attorney general, on the other hand, can sometimes wipe the slate clean, especially if there is something about the debt, or the way it is being collected, that bends or breaks the rules.
In West Virginia, for example, Attorney General Darrell McGraw has entered into a settlement agreement with Financial Credit Services ("FCS"), a debt purchaser based in Palatine, Illinois, that purchased canceled debts of $6,675,474.64 for 1,451 West Virginia consumers.
According to FCS, the defaulted credit card accounts in question were originally owed to numerous mainstream credit card banks, including Bank One, Citifinancial, Chase, GE Capital, Household, MNBA, and Providian.
McGraw began an investigation of FCS in January, 2007 after receiving consumer complaints disclosing that it was collecting debts in West Virginia without a license. The complaints also disclosed that FCS threatened to file suit and report debts to credit bureaus when it did not intend to take these actions. The attorney general also alleged that FCS did not have any verifiable proof of the debts that it sought to collect other than computer spreadsheets.
In addition to relieving consumers of the alleged indebtedness, FCS also agreed to refund all payments it collected, which so far amounts to only $2,481.00. The amount actually collected was likely small because FCS said it only contacted three per cent of the consumers.
"My office remains concerned about the debt purchasing industry, which typically purchases accounts for pennies on the dollar and rarely obtains any proof of the debt that would be admissible as evidence in a court, McGraw said. "This practice is troublesome because state and federal laws require that collection agencies be able to verify a debt when disputed by consumers, an important obligation to consumers that debt purchasers can rarely meet."
