If you’re tempted to feel sorry for credit card companies, what with all the new restrictions kicking in Feb. 22, read on.

Capital One was recently sued by West Virginia’s attorney general for a variety of alleged misdeeds, including sending customers a debt repayment plan disguised as an offer of new credit. (Hat tip to Bill Hardekopf at LowCards.com for bringing the suit to my attention.)

Capital One sent the solicitations to people whose balances had already been charged off as bad debt, West Virginia Attorney General Darrell McGraw alleged in his complaint. Although it looked like a new credit card offer, what Capital One was really offering was $1 of new credit in exchange for the customer agreeing to have the charged-off balance transferred to the new card, McGraw said.

The agreement allowed Capital One to charge interest, late fees and over-the-limit fees on debt that otherwise would have been beyond its reach, the complaint alleges. The agreement also allowed Capital One to re-age the debt, restarting the statute of limitations.

According to a Legal Newsline article by Nick Rees:

“Capital One’s practice of offering nominal extension of credit, if and only if, the consumer agreed to pay off a debt too old to be sued on is tantamount to loan sharking,” McGraw said.

The complaint alleges Capital One also:

  • issued multiple low-limit credit cards, each charging exorbitant fees, rather than raising credit limits on consumers’ existing accounts
  • unconscionably imposed over-the-limit fees on consumers’ accounts
  • sold services to consumers who could not benefit from the services
  • billed and attempted to collect for credit card accounts that were never activated.

I’ve made a big fuss about the difference between fair play and foul play, and how often credit card companies crossed the line. But this little scheme may have crossed another line: the one between foul play and pure evil.

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