West Virginia Attorney General Darrell McGraw today announced settlement agreements with three unlicensed collection agencies that will result in an estimated $1.3 million in cancelled debts for 161 West Virginia consumers and $15,337 in cash refunds, according to a news release.

The Attorney General’s Consumer Protection Division had opened an investigation against the companies – Trailhead Capital LLC, a debt buyer based in Chicago; Hollis Cobb Associates Inc., Trailhead’s affiliated collection agency in Norcross, Ga.; and Troy Capital LLC, a debt buyer based in Las Vegas – after receiving complaints that revealed the three businesses were collecting debts in West Virginia without a license and surety bond as required by state law.

Records also showed that the debts the companies were attempting to collect were primarily charged-off credit card accounts originally owed to JPMorgan Chase, Wells Fargo Bank and GE Capital.

In West Virginia, businesses that purchase defaulted debts for collection, as Trailhead and Troy Capital did, cannot avoid being licensed and bonded by hiring other agencies to assist them in collecting the debts

"Rather than working with consumers to develop plans that might enable them to pay their debt over time, banks increasingly sell defaulted credit card debt for pennies on the dollar to collection agencies called debt buyers," McGraw said. "Debt buyers often take overly aggressive collection actions that include the filing of lawsuits – even when they have little proof of the debts they seek to collect from consumers."

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