State AG Strikes Again: $300,000 from Debt Collector and Payday Lender

West Virginia Attorney General Darrell McGraw Wednesday announced a settlement with Internet payday lender Government Employees Credit Center (GECC) and P.D. Recovery, a now-defunct collection agency used by GECC, that will result in more than $300,000 in cancelled debts and refunds of interest charges for 348 West Virginia consumers. The companies and their owners also agreed to permanently refrain from making or collecting Internet payday loans in West Virginia.

The settlement with GECC marks the latest achievement in Attorney General McGraw’s continuing efforts to halt unlawful Internet payday loans in West Virginia. To date, McGraw’s office has recovered $2.7 million in refunds and cancelled debts for 8,497 West Virginia consumers.

“Despite the difficulty we encountered in the early stages of these investigations, I commend GECC and Dollar Financial Group, which took responsibility for the actions of its defunct subsidiary P.D. Recovery, for cooperating,” Attorney General McGraw said. “The companies resolved the concerns of our office by making full restitution to all consumers who obtained loans from GECC.”

Attorney General McGraw — noted filmmaker — opened an investigation of GECC in March of 2006 after receiving complaints that the company was making illegal Internet payday loans in West Virginia. Although GECC agreed to stop making new loans in West Virginia, it refused to comply with the Attorney General’s investigative subpoena requiring the company to disclose records of its loans to other West Virginia consumers.

Consumers’ complaints had shown that GECC typically charged a fee of 25% on each two-week loan, equal to an annual interest rate of 650%. West Virginia’s usury laws set the maximum interest rate for such loans at 18% annually. GECC’s initial refusal led to subpoena enforcement and contempt proceedings that have also been resolved by the settlements announced today.

McGraw had also opened an investigation of P.D. Recovery after learning that GECC had hired the subsidiary of Dollar Financial Group to collect its defaulted accounts. P.D. Recovery was not licensed to collect any debts in West Virginia and also refused to comply with the Attorney General’s investigative subpoena.

The Kanawha Circuit Court Order agreement with GECC prohibits the company and its owner, Vincent Keith Ney, from making or collecting Internet payday loans in West Virginia in the future. An earlier order also prohibits Dollar Financial Group and its owner, Jeffrey A. Weiss, from collecting Internet payday loans in West Virginia. Additionally, Dollar Financial cannot collect debts in the state without first obtaining a business license and surety bond as required by the State Tax Department.

The court’s final orders settle all of the Attorney General’s claims against the companies and dismisses the Attorney General’s previous contempt proceedings against GECC.