Kirby Sweeps Up In West Virginia

September 16, 2004
Over 1,000 West Virginia consumers got black smudges on their credit reports after defaulting on payments to Kirby vacuum's finance company. Now, those smudges are being swept up.

West Virginia Attorney General Darrell McGraw said his office has reached a settlement with United Consumer Financial Services Company of Westlake, Ohio, that removes all negative information it had reported to the three major credit bureaus about 1,157 West Virginia consumers. The customers allegedly defaulted on loans for purchases of Kirby vacuum cleaners.

McGraw says United Consumer Finance, a wholly-owned subsidiary of The Scott Fetzer Company, exclusively finances the high-priced Kirbys that are marketed through a nationwide dealer network that targets consumers with high-pressure, in-home sales presentations.

The settlement also relieved the affected West Virginia consumers from all further obligations to pay the charged-off accounts, an amount estimated to exceed $1 million.

McGraw's Consumer Protection Division began investigating the company in 2002 after learning that it had hired at least two unlicensed collection agencies to collect delinquent accounts in West Virginia. McGraw's office also found that United Consumer failed to furnish consumers with proper notice of their rights before reporting the defaulted accounts to credit bureaus, an action that harmed consumers' credit ratings.

The settlement alleges that United mailed unsigned computer-generated letters to consumers who allegedly defaulted on their accounts during the 1990s and up until May, 2002. This practice ended after the Attorney General initiated his investigation.

McGraw asserts that the required letter, which advises consumers of their important right to "cure" default, must be signed by a company official and must also include a notarized certificate confirming under oath that the letter was placed in the mail on the date indicated.

Actual proof of the date of mailing is important because the law requires that consumers be given 10 days from the date of the letter to cure the alleged default. Although UCFS denied that its notices were defective, the company agreed to reform its future notices in the manner requested by the Attorney General.

The settlement also charges United Consumer entered into contracts with Harris & Harris, now known as Business Credit Services, Inc., of Chicago, Illinois, and Receivable Recovery Management Corporation of Great Falls, Virginia, in 1993 and 1994, respectively, to collect delinquent accounts in West Virginia. The companies were not licensed and bonded to collect debts in West Virginia as required by the State Tax Department.

Although United Consumer denied that it was responsible for the companies' unlawful collection practices, it agreed to verify that all companies it hired to collect delinquent accounts in the future would be properly licensed and bonded.

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