Debt collector charged fees and interest illegal in W.Va., says AG

Debt collector charged fees and interest illegal in W.Va., says AGWest Virginia's attorney general's office is suing a Washington state debt collector for charging consumers fees and interest -- in one case turning a $48.75 debt into an almost $300 bill.

West Virginia doesn't allow companies to add fees, Assistant Attorney General Norman Googel told Consumer Ally, except for education loans that already disclose them in contracts. "We have an almost total ban on fees," he said, though rules vary from state to state as to whether collection agencies can allow them if they are part of a contract.

The lawsuit contends Seattle Service Bureau Inc., which does business as National Service Bureau, tacked on interest and fees to the debts it was trying to collect. The suit says the company is unlicensed in West Virginia and also allegedly threatens consumers with legal action if they don't pay up. Also named in the lawsuit are the company's officers and main shareholders, David B. Conyers and Candace J. Conyers.

When Consumer Ally contacted National Service Bureau for comment, the woman who answered its phone said, "nope. No thanks. Sorry. Bye bye," and hung up.

In a letter to the attorney general's office dated Nov. 6, 2009, David Conyers said that "after reviewing the file and the law, we have not found anything that would prevent us from charging interest on imaging services performed by our client in the state of West Virginia." The letter -- a response to a complaint -- is included in the lawsuit's documents.

Googel says the state has complaints against the company going back to 2003. One of the suit's goals is to get cash back and refund consumers.

In an unrelated case the state announced at the same time, another lawsuit has been filed against New York's Cavalry Portfolio Services LLC and its affiliates, Cavalry Investments LLC, Cavalry SPV LLC and Cavalry SPV II LLC, alleging that company isn't licensed to collect on debt in the state. Also named in the suit are Michael Godner, Steve Anderson, Don Strauch and Christian Parker.

"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," Attorney General Darrell McGraw said in a statement.

A call seeking comment from Cavalry Portfolio Services was not returned.

Consumers do have some protection under the federal Fair Debt Collection Practices Act, says the U.S. Federal Trade Commission.

Debt collectors can't harass consumers by calling early in the morning or the middle of the night. They also can't threaten to sue and then not follow through on the legal action. Consumers who dispute that they owe anything must send a letter within 30 days to the debt collector stating they don't owe or ask for verification of the debt. The debt collector is barred from contacting that consumer unless it provides proof of the debt.
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