Are class action filings on the rise in West Virginia based on violations of the state’s Consumer Credit and Protection Act?
In the context of debt-collector-friendliness, West Virginia has long been the problem child in comparison to its neighboring states. But in recent years, West Virginia has really earned its reputation. A 2015 survey conducted by The Harris Poll for the U.S. Chamber Institute for Legal Reform produced results identifying West Virginia as the overall worst state for litigation. Notably, West Virginia earned a “C-“ in the element of “treatment of class actions and mass consolidation suits”. Coincidentally (but probably not), also in 2015, West Virginia amended its Consumer Credit and Protection Act to change its aggregate limits in class actions as well as individual actions.
West Virginia’s Consumer Credit and Protection Act (W.V. Code § 46A-5-101) (“WV Consumer Act”) has long included a private right of action for violations of the state’s consumer protection laws, but until 2015, damages were generally limited to actual damages, as well an amount determined by the court of “not less than one hundred dollars nor more than one thousand dollars.” The previous range was actually anywhere from $100 to approximately $4,800 per violation because of a separate statutory adjustment for inflation that also was subject to the discretion of the trial judge. W.V. Code § 46A-5-106. That meant a potential payout of $4,800 per violation.
The 2015 amendments did decrease the maximum per violation amount from $4,800 to $1,000. But it wasn’t all good news. Unlike the class action caps provided for pursuant to the Fair Debt Collection Practices Act, the amendments to the WV Consumer Act included that in a class action, “the aggregate limits on the amount of the [$1,000 per violation] penalty shall be applied severally to each named plaintiff and each class member such that no named plaintiff nor any class member may recover in excess of the greater of $175,000 or the total alleged outstanding indebtedness.” W.V. Code § 46A-5-101(2).
After the WV Consumer Act was amended in 2015, a curious trend ensued. ACA members have noticed a shift from individual to class action filings in that state. Detecting the 2015 amendments and the potential exposure for defendant debt collectors as the reason behind the trend shift is unmistakable. Naturally, the potential for much larger monetary penalties incentivizes consumer attorneys to bring class actions as opposed to lawsuits by individual plaintiffs. Unfortunately, that is exactly what ACA members are seeing in this state.
And as if that isn’t enough doom and gloom, the statute of limitations was extended to four years giving consumers ample time in which to file their claim(s). Amendments to the WV Consumer Act like those in 2015 as well as newly enacted laws such as the statute of limitations disclosure in 2017 (§ 46A-2-128(f)) should cause members to pause and take extra caution when collecting from West Virginia residents due to the potential for catastrophic payouts. ACA members collecting debts from West Virginia residents should have collection letters regularly reviewed by an attorney that has significant experience in the WV Consumer Act and understands the West Virginia landscape.