CHARLESTON, W.Va. (9/26/13)--West Virginia Attorney General Patrick Morrisey Tuesday announced that four large banking companies will pay the state $1.95 million each--or $7.8 million total--to settle lawsuits alleging the companies' credit card protection programs violated West Virginia law.
The settlements were reached three months after the West Virginia Supreme Court of Appeals ruled in the case State ex rel. Discover Financial Services Inc. vs. Neibert that the Office of the Attorney General had the authority to use special assistant attorneys general in certain cases. The four financial institutions--Bank of America Corp., JP Morgan Chase & Co., Citibank/Citigroup Inc., and GE Money Bank--were parties in that case.
The banks engaged in misleading and deceptive tactics to enroll customers in payment protection programs, which involved fees of typically 89 cents per $100 credit card balance and collectively netted millions of dollars for the banks over a period of several years, according to the complaint filed by the office.
The complaint said bank representatives would ask new cardholders whether they were interested in entering a program that would cover minimum monthly payments in the event of a major life change, such as loss of income, spouse or other event. If cardholders even expressed "interest," they were automatically enrolled in the program without being given an opportunity to review its terms and conditions, including the fee structure, what the program would offer and how benefits would be determined. The banks denied the allegations.
The office did not settle with Discover Financial Services, HSBC Card Services or World Financial Network Bank. Claims against those institutions will continue, said Morrissey.
Under the terms of the settlement and the office's agreement with the governor and the state legislature, the settlement monies will help ensure the state's Consumer Protection Division has three years of operating revenue. The remainder will be returned to the legislature.