CHARLESTON, W.Va. (Legal Newsline) - West Virginia Attorney General Darrell McGraw said Tuesday his office has reached a $13.5 million settlement with Capital One over the bank's past credit card practices.
The settlement was reached with Capital One Bank (USA) N.A.; Capital One Service LLC, a Delaware corporation; Capital One Services II, LLC; Capital One Services III, LLC; and COSI Receivables Management Inc.
McGraw's office said the settlement resolves claims over credit card practices used from 2001 to 2005, in particular the bank's sale of payment protection and its Credit Recovery Services line of business.
The Attorney General's Office began its investigation into Capital One's credit practices in 2005.
The investigation led to a legal battle in two circuit courts, the West Virginia Supreme Court of Appeals and the U.S. District Court for the Southern District of West Virginia.
A decision by the U.S. Supreme Court eventually paved the way for the State to proceed against Capital One.
In 2010, the Attorney General's Office filed an action in Mason County. A trial date of April 24, 2012 was set by Judge David W. Nibert.
Instead, Capital One agreed to settle.
McGraw's office said the bank -- which denies liability -- agreed to provide $3 million in debt forgiveness to West Virginia consumers, $9.5 million to the State to be used for financial relief for consumers, and $1 million to his office for consumer education and restitution.
"We're pleased to have worked with Attorney General McGraw to resolve this matter, which dates back to a time prior to 2006," Tatiana Stead, a spokeswoman for Capital One, said in a statement.
"We've since made significant improvements and look forward to continuing to serve our card customers in West Virginia."
McGraw said he was "pleased" with the settlement.
"This was a hard-fought battle, resulting in a lot of money for the state of West Virginia," he said in a statement.
"Capital One is to be commended for changing the practices that prompted the State's action."
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.
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