December 13, 2004
The long and bitter West Virginia feud between the West Virginia Attorney General's office and Applied Card Systems, an affiliate of Cross Country Bank, is over ... for now. The companies have agreed to be enjoined from engaging in deceptive marketing of credit cards and abusive debt collection practices in West Virginia.
The agreement, approved by the companies' owner, Rocco A. Abessinio, resulted in the cancellation of a December 10 hearing on Attorney General Darrell McGraw's request for an injunction before Kanawha Circuit Judge James C. Stucky.
In addition to the West Virginia injunction, the Abessinio-owned companies are subject to similar injunctions obtained by the attorneys general of New York and Minnesota as well as a nationwide injunction entered by the Federal Trade Commission on October 6, 2004. Suits by the attorneys general of Wisconsin and Texas also remain pending.
"I am pleased that we were able to reach an agreement with Cross Country Bank and Applied Card Systems that protects West Virginia consumers while the case is pending. Now that this hurdle has been crossed, we can concentrate on reaching a final resolution that will resolve all remaining concerns of our office," McGraw said.
Although an agreement has been reached on the terms of a preliminary injunction, the litigation remains pending and a trial in the matter is scheduled for June 21, 2005, before Judge Stucky in the Circuit Court of Kanawha County, Charleston, West Virginia.
Cross Country Bank is a subprime credit card bank that markets credit cards with high up-front fees and interest rates to consumers with bad credit. The attorneys general of the five states with cases pending against Cross Country Bank and Applied Card Systems have relied upon the testimony of many former employees of Applied Card Systems to support their claims of unlawful activities, including employees from the company's Beckley, WV, office that Mr. Abessinio closed in April, 2003.
The West Virginia order requires Cross Country Bank and Applied Card Systems to put into place and enforce procedures reasonably designed to ensure that the bank complies with West Virginia consumer protection law in the marketing of its credit cards and in its debt collection practices.
Among other things, the order prohibits the bank from:
• debiting the accounts of consumers without their express authorization;
• making repeated telephone calls to consumers at home, at work, or at other times or places known to be inconvenient with the intent to annoy, abuse, oppress, or threaten them;
• using profane or obscene language or other insulting or degrading conduct;
• falsely stating that a collection call is "urgent" or an "emergency" or using other deceptions to induce consumers to accept a call; and
• falsely representing to consumers that the bank will waive late charges or over-the-limit fees in exchange for partial payments on accounts.
The bank is also prohibited from inducing consumers to purchase related products or services such as "Credit Account Protection" and "Applied Advantage" by representing that such products offer benefits that they do not have; charging consumers for such related products or services without their knowledge or consent; and sending written solicitations to consumers representing that the bank's accounts are useful in building or improving credit.
The preliminary injunction also contains detailed provisions requiring the Bank to monitor its own practices and authorizing the attorney general's office, upon request, to inspect and copy documents to oversee compliance with the order. The monitoring and inspection provisions in the West Virginia court order mirror the provisions of the Federal Trade Commission's nationwide order.
