CHARLESTON, WV -- The following information was released by the office of the West Virginia Attorney General:
In a settlement reached by West Virginia Attorney General Darrell McGraw, two New York-based debt collection firms have agreed to cease doing business in the state, issue refunds of over $11,000 to customers, and make a $5,000 payment to the state.
Attorney General McGraw announced that his office entered the agreements with two affiliated collection agencies, Northtown Capital Associates, Inc., and Interstate Check Systems, Inc., both based in Amherst, New York. McGraw's office had opened an investigation of Northtown and Interstate after receiving a complaint that the companies were collecting loans in West Virginia without a license and surety bond as required by the state tax department.
Northtown and Interstate were attempting to collect debts allegedly owed to an Internet payday lender, Payday Yes, which had previously reached an agreement with McGraw's office to cease lending in the state and to close all of its West Virginia accounts. Internet payday loans, which typically come with exorbitant annual interest rates ranging from 600 to 800 percent, are illegal in West Virginia.
"West Virginia's laws regarding the licensing of collection agencies are intended to protect both the industry and consumers," McGraw said. "My office will continue its rigorous enforcement of these laws to ensure a level playing field for all legitimate agencies that collect debts in West Virginia. We will also take action to prohibit any collection agency, licensed or unlicensed, from collecting unlawful debts such as Internet payday loans."
Under the terms of the agreement, Northtown and Interstate will not collect Internet payday loans and will refrain from collecting any debts in West Virginia until licensed and bonded by the state tax department. The companies also agreed to make a payment of $5,000 to the State of West Virginia, to refund or cancel $11,117.25 in debts for 21 West Virginia consumers, and to close all West Virginia accounts with a zero balance.