McGraw settles with debt collectors

Nick Rees Feb. 19, 2010, 9:15am


CHARLESTON, W.Va. (Legal Newsline) - Settlements have been reached by West Virginia Attorney General Darrell McGraw with three debt collection companies.

The settlements, reached with Allied Interstate of Minneapolis, Jefferson Capital Systems of St. Cloud, Minn., and Wilhelm, West, Kacey & Associates of Canton, Ga., require the companies to conform their practices with state and federal debt collection laws. The companies will also make restitution, cash refunds and cancel debts totaling $404,091.48 for 446 West Virginia consumers.

Allied collects debts for others but does not purchase debts. McGraw's investigation into the company followed numerous wrong person complaints.

Allied has agreed to pay $50,000 to be used for consumer protection and educational purposes and to provide restitution to 66 West Virginia consumers aggrieved by its practices. It has also taken steps to curtail repeat wrong person calls and develop a "rules-based collection technology."

Jefferson Capital Systems was allegedly collecting debts owed on Internet payday loans, which are illegal in West Virginia. Jefferson was also found to be conducting a "Fresh Start Solution Program," which attempted to collect debts by offering consumers with bad credit a new credit card, McGraw says.

The old debt would then be transferred to the new credit card account after a certain number of payments were made, McGraw says.

Jefferson, as part of the settlement, will no longer offer its Fresh Start Solution Program or similar programs in West Virginia unless it registers as a credit services organization with the state. The company also canceled debts totaling $77,691.50 to 260 West Virginia consumers and refunded an additional $97,940.25.

WWKA, which is a debt purchaser, agreed to cancel debts totaling $178,559.73 that were allegedly owed by 120 West Virginia consumers. The company will also discontinue its debt collection in the state in the future unless it acquires a license. Additionally, WWKA promised not to threaten lawsuits to collect debts that had past the statute of limitations.

In addition to the settlements, McGraw's has warned about an organization calling itself "Mouch & Thompson PLLC," which had mailed letters to Charleston residents about grants to assist low income individuals in paying their rent, guaranteeing grant approval for the first 50 applicants on Monday.

The letters stated that the grants were awarded by the American Recovery and Reinvestment Act of 2009, commonly called the Economic Stimulus Bill.

Mouch & Thompson PLLC does not exist according to state databases and "Wesley Mouch," the signature at the bottom of the letter, is the name of a character from Ayn Rand's "Atlas Shrugged."

Additionally, the location given in the letter as the company's office is vacant and, according to its landlord, had recently been broken into before its locks were changed.

The Charleston Police Department sent officers to the location on Monday, where a line of people waited for the vacant building and non-existent organization. The people were informed that the letter was a scam and were sent home.

"Consumers need to do thorough research before providing personal information to anyone promising to give them free money," McGraw said.

"There are limited grants available to individuals under many different programs. However, these grants require consumers to contact the government agency directly in order to apply. Legitimate agencies offering grants do not require consumers to stand in line for one day only in order to qualify."

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