McGraw sues debt collection agencies

Keith Loria Jun. 7, 2010, 11:00am

CHARLESTON, W.Va. (Legal Newsline) - West Virginia Attorney General Darrell McGraw announced on Friday that his office has filed charges against four collection agencies in two lawsuits aimed at companies in Washington and New York for allegedly violating state consumer protection laws.

McGraw's Consumer Protection Division filed the first suit against Cavalry Portfolio Services, which collects debts for its unlicensed affiliates, as well as unlicensed debt-purchasing companies Cavalry Investments, Cavalry SPV and Cavalry SPV II.

The lawsuit alleges that the companies bought an unknown number of charged-off credit card accounts and filed numerous suits in West Virginia.

The lawsuits were in violation of state tax department regulations as the companies did not have a license, it is alleged. The suit further alleges that the Cavalry companies failed to comply with a subpoena issued by the AG's office.

"Debt purchasers like the Cavalry companies have flooded the West Virginia courts with suits against financially unsophisticated consumers that often end in default judgments, garnishment of wages, and liens on homes-even without actual proof of the debt," McGraw said.

"In this case, Cavalry has refused to become licensed as a collection agency and failed to disclose its business activities in response to our subpoena."

A second suit filed by McGraw on Friday charges Seattle Service Bureau, Inc., doing business as National Service Bureau, of Shoreline, Wash., with collecting debts in the state without a license. The company also allegedly has added illegal interest, collection fees and other charges to debts owed by West Virginia consumers.

"National Service Bureau has refused to cooperate with the efforts of my office to recoup unlawful charges and fees that it has collected from West Virginia consumers for many years," McGraw said.

"We will continue to take any actions that are necessary to protect West Virginia consumers from collection agencies that refuse to abide by our laws."

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