West Virginia AG to Cancel $6.6 million in Card Debt in Settlement with Debt Buyer

West Virginia Attorney General Darrell McGraw announced Wednesday that his office entered a settlement agreement with Financial Credit Services (FCS) that netted canceled debts of $6,675,474 for 1,451 West Virginia consumers.

FCS, a debt purchaser based in Palatine, Ill., said that most of the debt in question was held in credit card accounts from major issuers such as Bank One, Citi, Chase, GE Capital, Household, MNBA, and Providian.

The settlement comes after an investigation initiated by McGraw’s office in January 2007. The investigation was triggered by complaints against FCS that it was collecting in the state without a proper license.

In addition to relieving consumers of the indebtedness, FCS also agreed to refund all payments it collected, $2,481. The amount collected was likely small because FCS said it only contacted three per cent of the consumers.

McGraw said in a statement, “My office remains concerned about the debt purchasing industry, which typically purchases accounts for pennies on the dollar and rarely obtains any proof of the debt that would be admissible as evidence in a court. This practice is troublesome because state and federal laws require that collection agencies be able to verify a debt when disputed by consumers, an important obligation to consumers that debt purchasers can rarely meet. Notwithstanding our concerns, I commend FCS for granting this important relief to West Virginia consumers despite the fact that so few consumers were contacted.”