A day after announcing he had resolved a complaint with a debt relief company over violations of state law regulating the amount of fees that consumers can be charged, West Virginia Attorney General Darrell McGraw announced that his office had reached settlement agreements with three debt collection agencies for operating in the state without licenses.

The three collection agencies — Trailhead Capital LLC, a debt buyer based in Chicago; Hollis Cobb Associates Inc., Trailhead’s affiliated debt collection agency in Norcross, GA; and Troy Capital LLC, a debt buyer based in Las Vegas — were investigated after complaints filed with the Attorney General’s Consumer Protection Division revealed that the companies were violating state law by collecting debts in West Virginia without licenses or surety bonds.

The companies were primarily attempting to collect charged-off credit card debt originally owed to Chase, Wells Fargo Bank, and GE Capital.

According to terms of the settlement agreement, 161 West Virginia consumers will receive $1,277,648.33 in cancelled debts and $15,337.50 in cash refunds (“Attorney General McGraw Recovers $1.25 Million From Three Unlicensed Collection Agencies,” West Virginia Attorney General’s Office press release, Nov. 9, 2010).

“Our nation suffers from an explosion of credit card debt resulting largely from companies that extended credit without due regard to consumers’ ability to repay and without clearly disclosing the terms of financing,” McGraw said in a statement.

“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 … [who] 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,” McGraw explained.

McGraw pledged to continue his office’s “vigilance in ensuring that all debt buyers are licensed and bonded, as well as follow the letter of our state’s consumer protection laws.”

Residents of West Virginia who would like to file a consumer complaint or otherwise inform the Attorney General’s office about unfair or deceptive practices can call the state’s Consumer Protection Hotline at (800) 368-8808 or fill out a complaint form from the Attorney General’s website at www.wvago.gov/takeaction.cfm.

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