Northwest Bank settles with Pa. Attorney General over debt collection practices

Northwest Bank agreed to pay the commonwealth $15,000 along with other concessions to settle accusations by state Attorney General Josh Shapiro that it made deceptive threats of legal action against consumers who fell behind in vehicle loan payments.

Under the Assurance of Voluntary Compliance agreed to by both parties this week, in addition to the money, Northwest agreed to strike many of the judgements made against vehicle consumers and comply with consumer protection and debt collection laws.

Shapiro said Northwest Bank made deceptive threats of legal action against consumers in recent years, including dispossession of property via Sherriff’s Sale, if they didn’t agree to a repayment arrangement with the lender. The bank had filed collection suits in a court that didn’t apply to consumer-defendants, resulting in a default judgement in favor of the bank.

A spokesperson for Northwest said the company believes its vehicle repossession and collection practices have “fully complied” at all times, but agreed to modify its operations to satisfy the Office of the Attorney General.

“As stated in the Assurance of Voluntary Compliance, Northwest did not admit to any wrongdoing and, as a good corporate citizen, voluntarily agreed to amend its practices to conform to the Attorney General’s view of the law,” the spokesperson said in an email statement.

Shapiro’s office began its investigation after receiving information that Northwest filed multiple collection suits in a district justice court in Warren County. Shapiro said the investigation found most consumer-defendants named in those actions resided or purchased their vehicles in another part of the state and had their vehicle installment contract assigned to Northwest Bank.

According to Shapiro’s office, Northwest sent letters to indebted consumers saying that judgements against them for failing to agree to a repayment plan could reflect poorly on credit reports. The letter said the bank would turn the case over to its attorneys for further legal action if they failed to make their payments. But the judgements were never referred to Northwest’s attorneys for further legal action as the bank’s letter claimed, Shapiro said.

“Northwest Bank has a right to pursue legal action when borrowers don’t pay back their loans,” Shapiro said in a statement released by his office on Wednesday. “But when they threaten borrowers with legal action they never intend to pursue or purposefully file lawsuits in counties some distance away from the borrower, they are manipulating the system for their own benefit. We will not let any business, big or small, exploit Pennsylvanians in pursuit of a rip-off pay day.”

The agreement requires Northwest to strike all existing judgements filed against the vehicle consumers since the start of 2013. Consumers who paid amounts toward the judgements will receive restitution or credit toward their balance, the agreement states. However, Northwest was not required to admit fault as part of the agreement.