The West Virginia Attorney General has entered into a settlement agreement with Financial Credit Services, FCS, to repay debt that the company collected from West Virginia consumers and to stop harassing them in violation of the Fair Debt Collection Practices Act, FDCPA, and state law.

FCS violated debt collection laws

According to news reports, West Virginia's Attorney General, Darrell McGraw, began investigating FCS in 2007 after receiving reports that the debt collection company was attempting to collect on old debts without being licensed to do so in the state. In addition, FCS customer service representatives were threatening residents in order to collect the old debt - something that is strictly prohibited by the FDCPA and most state laws.

FCS allegedly purchased over $6 million worth of old debt from large banks such as Bank One, Citi Financial, Chase, GE Capital, Household, MNBA and Providian - likely for pennies on the dollar. Luckily for West Virginians, McGraw's office was able to settle with FCS early on in the process when the collection agency had only collected about $2,500 - which it has agreed to pay back. Companies like FCS are known as junk debt buyers and have a reputation of doing whatever it takes to collect old debt that is usually unverified or past the statute of limitations.

A growing industry

Junk debt buying is a growing industry and many consumers make the mistake of paying debt that they do not owe due to the intimidating conduct of the debt collection customer service representatives. Here's how it works in a nutshell:

You owe money to a lender such as Bank One and the debt becomes delinquent. Bank One will attempt to collect on the debt. If unsuccessful, it will likely write off the debt and sell the it to junk debt buyer number 1 for pennies on the dollar, who will also try to collect it from you. If it is also unsuccessful, it will sell the debt to junk debt buyer number 2 and so on.

Unfortunately, these junk debt buyers generally don't even have the specifics of the debt (which is often well past the applicable statute of limitations for collection) and often use illegal tactics to collect debts such as intimidation and threats - all of which are against the FDCPA and most state consumer debt collection laws. However, most consumers don't know that they have rights and do not need to cooperate with these firms. If you are being harassed by a junk debt buyer, contact an experienced attorney whose practice focuses on debt collection laws to discuss your situation.