Senate Bill No. 563 amends several provisions of the West Virginia Consumer Credit Protection Act (WVCCPA). The Bill passed the West Virginia Senate and the House of Delegates with high approval margins, and was signed into law by Governor Jim Justice on April 21, 2017. These amendments to the WVCCPA will have an impact on claims that are frequently litigated in West Virginia. Here is a summary of the material amendments and relevant effective dates.
- Balloon Payment Disclosure (§ 46A-2-105)
- When disclosing balloon payments, the loan agreement now must contain a disclosure “in form and substance substantially similar to the” the statutory disclosure. This ends the common argument for strict compliance under the former version of the section.
- Notice of Attorney Representation (§ 46A-2-128(e))
- Debt collectors now have three (3) business days, rather than 72 hours, to cease communication with a consumer that has sent notice of attorney representation.
- Further, consumers must send notice of attorney representation via certified mail, return receipt requested to the debt collector’s registered agent in West Virginia.
- Statute of Limitations Disclosure (§ 46A-2-128(f))
- Disclosure that a debt is beyond the statute of limitations for a legal collection action must now be disclosed in every written communication, not just the initial written communication. Anticipate increased litigation on this disclosure to continue.
- Protecting Foreclosure Sales (§ 46A-5-101)
- WVCCPA Actions that seek to set aside a foreclosure sale must now be brought within one (1) year of the final foreclosure sale. This means actions brought more than one year after the final foreclosure sale are barred.
- Creating a Right to Cure (§ 46A-5-108)
- Significant new provision: creditors and debt collectors now have a right to cure before a consumer can file a WVCCPA complaint.
- Completing a cure offer serves as a complete defense to liability.
- Right to Cure Timeline – (notice, offer, acceptance, completion)
- Creditor has 45 days to respond once notified of the alleged violation and underlying facts via certified mail, return receipt requested;
- Consumer has 20 days from receipt to accept a cure offer; and
- Creditor has 20 days from acceptance to “begin effectuating” the cure, which must be completed in a “reasonable time.”
- Creditor cure offer may be admissible in litigation and will bar liability of consumer’s attorneys’ fees and costs unless the award exceeds cure offer.
- Pleadings Cannot be Grounds for a Cause of Action (§ 46A-2-140)
- This new provision makes clear that “[n]othing contained in or omitted from a pleading filed in a court of this state shall be the basis of a cause of action under” the WVCCPA.
These amendments will take effect on July 4, 2017 (90 days after the Bill passed the House on April 5, 2017), and will provide additional clarity to the WVCCPA and its application to frequently litigated issues. While Bill 563’s amendments take effect on July 4, 2017, their application to loans and litigation in West Virginia varies by provision:
- The Balloon Payment Disclosure (§ 46A-2-105) applies to consumer credit sales or consumer loans entered on or after July 4, 2017;
- Notice of Attorney Representation (§ 46A-2-128(e), Statute of Limitations Disclosure (§ 46A-2-128(f)), and Pleadings Cannot be Grounds for a Cause of Action (§ 46A-2-140) apply to causes of action that accrue on or after July 4, 2017; and
- The Right to Cure (§ 46A-5-108) applies to causes of action filed on or after July 4, 2017.
Should you have questions or would like more information regarding these amendments and their anticipated effect on litigation in West Virginia, please feel free to contact John Lynch, Jason Manning, or Kyle Deak.
The Financial Services Litigation group at Troutman Sanders has handled hundreds of contested matters in West Virginia, including individual and class action cases and arbitrations, and also appeals to the Supreme Court of Appeals of West Virginia and the Fourth Circuit.