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Capital One Facing Court Complaints in Charleston, W.Va.

By Sally Maison
Published: Wednesday, March 10th, 2010

Recently, the office of West Virginia Attorney General, Darrel McGraw, requested a Mason County judge to stop what they allege to be improper credit card practices being perpetuated by the bank Capital One and a number of their subsidiaries.

Capital One Facing Court Complaints in Charleston, W.Va.This complaint was filed in the Mason Circuit Court and names Capital One, COSI Receivables Management Inc. and a few of other subsidiaries of the bank as defendants. The complaint accuses Capital One of several unfair credit card practices such as issuing new credit cards which were actually a disguised method of collecting debt, billing credit cards that were never activated and issuing multiple credit cards with low limits so that the bank could collect multiple fees instead of raising credit limits of already existing credit card accounts.

There were also some cases where West Virginian credit card holders with cards carrying credit limits of approximately $200 to $300 ended up with thousands of dollars in debt due to high penalty fees for either paying late or charging over their card’s credit limit, Charli Fulton, a senior assistant attorney general of the consumer protection division of the office said.

Capital One also sold consumers payment protection plans which would make minimum payments should a cardholder become unemployed or disabled, although said consumers already had government disability benefits, Fulton stated. These payment protection plans were also sold to consumers who were self-employed, and therefore, ineligible for disability benefits then subsequently turned them down when they made claims.

There were also cases where consumers were promised credit so that they may agree to reactivate debts which, due to the statute of limitations, were no longer subject to debt collecting lawsuits. The suit alleges that Capital One was able to collect late fees, interest and over-the-limit fees on debts that were already charged-off by establishing new credit card accounts aimed at paying charged-off debts. Consumers who reactivated these debts should have been immune to these charges in the first place.

Capital One also targeted consumers with low income and limited or poor credit histories with credit cards carrying limits for as low as $200 or $300. These cards carried membership fees varying from $6 per month, $39 per year or $59 per year. The bank would often bill consumers for the annual fee during the second monthly statement. This would then bring down the available credit on the credit card. If a consumer, unaware of the drop in available credit, should unintentionally go over the credit limit, he or she would have to pay over-the-limit fees which could be as high as $29.

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