Stop us if you’ve heard this one before: West Virginia Attorney General Darrell McGraw announced late Tuesday that his office has settled with a debt collection agency because the business was not properly licensed in the state.

McGraw’s press release pitches the action as a $1.7 million settlement. But the details show just how the attorney general arrived at the number.

The company, DP & Associates has reportedly agreed to cancel the debts of impacted consumers and offer refunds to others. The debt cancellation and refunds will total $1.7 million, according to the attorney general’s press release.

Total number of West Virginians who will benefit: 124.

“In these difficult economic times, it is especially heinous for companies to bully and exploit financially strapped consumers with false threats and phony debts,” McGraw said in the release. “Our Office will continually strive to protect West Virginians from these coercive, unlawful, and threatening debt collection techniques.”

The only evidence of coercive or threatening techniques was one anecdote involving a consumer that was allegedly told she would be arrested if she didn’t pay. The main issue appears to be that the company wasn’t properly licensed in the state.

The main takeaway here is that all ARM companies should be cautious about collecting in West Virginia. First, get licensed; this is a state that requires it. Second, don’t collect on payday loans in West Virginia. This story has nothing to do with that, but we’ve seen plenty of trouble around payday loans in the state (they are illegal there).

If you don’t do the above, prepare for your name to be flashed in a headline, because McGraw has shown that he will get the news out about actions against debt collectors.

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