The Legal Brief

By: Angela L. Beblo

Sometimes the best intentions have entirely unforeseen consequences. This is the case with changes that were made to the West Virginia Consumer Credit and Protection Act, W. Va. Code §§ 46A-1-101 et seq. (“WVCCPA” or the “Act”). At the time, there were hundreds of individual lawsuits relating to verbal notification of attorney representation wherein plaintiffs filed suit seeking thousands of dollars in statutory penalties, which at the time were up to $5,000 per unanswered call. The amendments were aimed at curbing some of these tactics that were generating the increase in lawsuits. The West Virginia Legislature amended the Act in order to more closely align the debt collection provisions of the Act with language similar to that in federal law and, specifically, requiring written notice of representation by an attorney. Unfortunately, those changes resulted in new theories for claims under the Act and a dramatic rise in the number of class actions being filed under the Act and tend to be aimed at actions and items that make businesses run more efficiently (i.e. any action that allegedly applies to all the accounts like form letters, form contracts, form notices, and fees or charges).

In 1974, the West Virginia Legislature enacted the WVCCPA.[1] The WVCCPA applies to certain types of consumer transactions entered into by West Virginia residents, including, but not limited to, credit sales, revolving charge accounts, loans, and leases.[2] It also applies to both original creditors and third party debt collectors.[3] The Act was intended to accomplish five items:

 (1) increase the availability of consumer credit by raising allowable finance charges (interest rates) and move toward equalization of rates available to consumers whether they borrow the money from a lender or buy the goods on credit from a seller; (2) regulate the rate of finance charges allowed for consumer credit transactions by prescribing rates and rules for computation; (3) regulate those businesses which make small consumer loans and which were formerly regulated by the small loan act; (4) protect consumers who purchase goods or services on credit or through consumer loans from deceptive selling techniques, unconscionable contract terms, and undesirable debt recovery and collection practices; and (5) protect consumers who purchase goods or services for cash or credit from, and to give them remedies for, defective or shoddy goods and services and unfair and deceptive selling practices.[4]

The Act is a remedial statute aimed at “protect[ing] consumers from unfair, illegal, and deceptive acts or practices by providing an avenue of relief for consumers who would otherwise have difficulty proving their case under a more traditional cause of action.”[5] The Act is given a “broad and liberal construction;” however, “the legislative purpose of the WVCCPA is not to impose harsh civil penalties for simple mistakes.”[6]

Although the WVCCPA was enacted in 1974 and claims under it have been asserted since its inception, cases under the Act increased beginning around 2004 when plaintiffs’ lawyers began filing hundreds of individual consumer cases across the state, with a high concentration of those cases being filed in the southern part of West Virginia. For example, in Raleigh County, the number of civil cases increased from 1,632 cases in 2003 to a peak of 3,443 cases in 2013 (see chart below[7]).

In 2009, while the average West Virginia circuit court’s civil docket was 33.6% of the overall case load, Raleigh County’s civil docket was nearly double the percentage of the state average.

In 2015, the West Virginia legislature amended several sections of the WVCCPA in an attempt to more closely align the Act with the federal Fair Debt Collection Practices Act. The 2015 WVCCPA amendments included

(a)        requiring notification of attorney representation be provided in writing instead of being provided verbally as previously allowed[8];

(b)       adding a mandatory venue provision for where civil actions should be filed;[9] and

(c)        changing the statutory penalty from a range up to approximately $5,000 (adjusted for inflation at the time from 1974 to 2015) to a flat $1,000 (adjusted for inflation from September 1, 2015).[10]

These changes had a significant, unintended impact on consumer cases filed in West Virginia. Although the Supreme Court of Appeals of West Virginia does not track class actions as a separate category of cases, case decisions after the 2015 amendments show an uptick in consumer class actions in state court under the Act, particularly with issues surrounding discovery and class certification.[11] Plaintiff and defense lawyers agree anecdotally that consumer class actions have increased over the past few years in West Virginia state courts based upon the potential for a higher recovery and the more uniform treatment of consumers by financial institutions.[12] This is particularly true for claims that attorneys believe have “fairly low dollar amount penalties on an individual basis.”[13] Data-intense class actions are both time-consuming and costly.

West Virginia’s trend of increasing consumer class actions is consistent with national trends. According to one report, consumer class actions across the United States nearly tripled during the decade between 2009 and 2019.[14] The Federal Trade Commission published a study in 2019 reviewing ten years of data relating to the effectiveness of different types of class action settlements.[15] In more recent years, the overall number of class actions slightly declined since then as attorneys shift focus from federal Fair Debt Collection Practices Act claims to federal Fair Credit Reporting Act claims.[16] This shifting trend in claims “highlights the importance of looking at claim-specific data” that is published.[17]

In West Virginia, case law shows that recent consumer class actions appear to be focused on fees and form documents that allegedly apply to broad swaths of individuals. For instance, the O’Briant matter asserted putative class claims based upon a form collection letter sent relating to medical debt that were “allegedly fraudulent billings”.[18] Similarly, the Dodrill case focused on a form “proposal/agreement and work orders containing” language the plaintiffs alleged was impermissible under West Virginia law.[19] In Alig, the class complaint concerned alleged information provided by a financial institution to appraisers relating to appraisals for mortgage refinances.[20] The U-Haul case revolved around claims based upon an “environmental fee” charged to everyone that rented from the defendant.[21]

As the world of consumer law evolves, entities that engage in transactions with individuals should conduct a thorough review of all practices, charges, and documents relating to their products and services to ensure both transparency and compliance with all laws, regulations, and contracts. If you have any further questions or need help with the WVCCPA, a consumer matter, or a class action, please contact Shane Harvey (sharvey@jacksonkelly.com; 304.340.1006), Vivian Basdekis (vhbasdekis@jacksonkelly.com; 304.340.1094), or Angela Beblo (angela.beblo@jacksonkelly.com; 304.340.1377).

[1] Vincent P. Cardi, The West Virginia Consumer Credit and Protection Act, 77 W. Va. L. Rev. 401 (1974-75). Available at: https://researchrepository.wvu.edu/wvlr/vol77/iss3/3 (last visited Sept. 6, 2022).

[2] W. Va. Code § 46A-1-104.

[3] Syl. pt. 3, Thomas v. Firestone Tire and Rubber Company, 164 W.Va. 763, 266 S.E.2d 905 (1980) (stating that Article Two of Chapter 46A “must be applied alike to all who engage in debt collection, be they professional debt collectors or creditors collecting their own debts”); See also Just. v. CNA Nat’l Warranty Corp., 346 F. Supp. 3d 873, 878–79 (S.D.W. Va. 2018); Lavis v. Reverse Mortg. Sols., LLC, No. 5:17-CV-00209, 2017 WL 2531580, at *5 (S.D.W. Va. June 9, 2017) (stating that “it is clear that the WVCCPA contemplates liability for creditors who engage in debt collection”); In re Machnic, 271 B.R. 789, 792 (Bankr. S.D.W. Va. 2002).

[4] Id. at 402.

[5] State ex rel. 3M Co. v. Hoke, 244 W. Va. 299, 309, 852 S.E.2d 799, 809 (2020) (quoting State ex rel. McGraw v. Scott Runyan Pontiac-Buick, Inc., 194 W. Va. 770, 777, 461 S.E.2d 516, 523 (1995)); see also Alig v. Quicken Loans Inc., 990 F.3d 782 (4th Cir. 2021) (vacated on appeal); State ex rel. Morrisey v. Copper Beech Townhome Communities Twenty-Six, LLC, 239 W.Va. 741 (2017); Dunlap v. Friedman’s, Inc., 213 W.Va. 394 (2003).

[6] Bourne v. Mapother & Mapother, P.S.C., 998 F. Supp. 2d 495, 505 (S.D.W. Va. 2014).

[7] Data contained in the 2009-2021 Annual Reports published by the Supreme Court of Appeals of West Virginia, found at http://www.courtswv.gov/public-resources/press/Publications/index.html (last visited Sept. 7, 2022).

[8] Compare W. Va. Code § 46A-2-128 (2014) with W. Va. Code § 46A-2-128 (2015).

[9] W. Va. Code § 46A-5-107 (eff. 2015).

[10] Compare W. Va. Code § 46A-5-101 (1996) and 5-106 (1994) with W. Va. Code § 46A-5-101 and 5-106 (2015).

[11] Compare State ex. rel. Dodrill Heating and Cooling, LLC v. Akers, __. W. Va. __, 874 S.E. 265 (2022); Chancellor Sr. Mgmt., Ltd. V. McGraw, __ W. Va. __, 873 S.E.D 811 (2022); State ex rel. W. Va. Univ. Hosps. – East, Inc. v. Hammer, 246 W. Va. 122, 866 S.E. 187 (2021); State ex rel. Health Care Alliance, Inc. v. O’Briant, 245 W. Va. 578, 859 S.E.2d 746 (2021); State ex rel. U-Haul Co. of W. Va. V. Tabit, 2018 WL 2304282 (W. Va. May 21, 2018); Young v. EOSCCA, 239 W. Va. 186, 800 S.E.2d 224 (2017) with White v. Wyeth, 227 W.Va. 131, 705 S.E.2d 828 (2010).

[12] https://www.wvnews.com/news/wvnews/class-action-law-continues-to-evolve-but-west-virginia-lawyers-see-future-for-it/article_4c771f34-78f4-59f7-8a11-9c4e012691cd.html (last visited Sept. 7, 2022).

[13] Id.

[14] https://www.law.com/nationallawjournal/2019/10/23/consumer-class-actions-nearly-tripled-in-the-past-decade-report-says/?slreturn=20220807133720 (last visited Sept. 7, 2022).

[15] https://www.ftc.gov/system/files/documents/reports/consumers-class-actions-retrospective-analysis-settlement-campaigns/class_action_fairness_report_0.pdf (last visited Sept. 8, 2022). The study looked at, among other items, notices, notices method, compensation/redress, claim filing, and check cashing rates. Id.

[16] https://www.wfmz.com/news/pr_newswire/pr_newswire_technology/lex-machina-releases-2021-consumer-protection-litigation-report/article_02791177-486f-53cf-bf2f-ef1bc8835270.html (last visited Sept. 7, 2022); https://www.lexisnexis.com/community/pressroom/b/news/posts/lex-machina-releases-2021-consumer-protection-litigation-report (last visited Sept. 7, 2022).

[17] https://www.wfmz.com/news/pr_newswire/pr_newswire_technology/lex-machina-releases-2021-consumer-protection-litigation-report/article_02791177-486f-53cf-bf2f-ef1bc8835270.html (last visited Sept. 7, 2022).

[18] See O’Briant, supra.

[19] See Dodrill, supra.

[20] See Alig, supra.

[21] See U-Haul, supra.