–USA Discounters accused of selling overpriced goods at high interest rates–
Jefferson City, Mo. – Attorney General Chris Koster announced today a settlement, primarily benefiting active and veteran service members, with retailer USA Discounters, also doing business as USA Living and Fletcher’s Jewelers. Missouri partnered with 49 other state attorneys general to obtain an estimated $95.9 million in restitution for consumers, and to resolve the states’ claims of deceptive trade practices against the company. Almost 400 Missourians are expected to receive more than $1 million total restitution in forgiven loans.
USA Discounters typically marketed to members of the military and veterans, advertising that military, veterans, and government employees would never be denied credit for goods purchased from the retailer. The company sold consumer products principally on credit, including furniture, appliances, televisions, computers, smartphones, jewelry and other consumer goods.
The Attorneys General alleged USA Discounters sold overpriced household goods at high interest rates, often using the military allotment system to guarantee payment. The states also alleged that USA Discounters engaged in unfair, abusive, false, and deceptive acts and practices. These allegations include that, in collecting on consumer debts, USA Discounters engaged in abusive tactics, constantly contacted service members’ chains-of-command, and caused some service members to lose security clearances and face demotions. These unlawful business practices, the states claim, were secured through misrepresentations and omissions in advertising, during the loan’s origination, and during the collection process.
USA Discounters closed its stores in the summer of 2015 before later declaring bankruptcy.
“It is imperative that businesses that target and prey on our active and veteran service members are brought to justice,” said Koster.
USA Discounters agreed to provide relief to certain former and current customers. Namely, USA Discounters agreed to:
- Write off all accounts with balances for customers whose last contract was dated June 1, 2012 or earlier, and correct the negative comment from the company on those consumers’ credit reports (approximately $71 million in consumer relief);
- Apply a $100 credit to all accounts whose contracts were dated after June 1, 2012, which were not discharged in bankruptcy, and correct the negative comment from the company on those consumers’ credit reports (approximately $2.89 million in consumer relief);
- Write off all judgments not obtained in the correct state of residence of the consumer, and correct the negative comment from the company on those consumers’ credit reports (approximately $21.2 million in consumer relief);
- Credit all judgments that were obtained in the correct state against members of the military with a credit equal to 50 percent of the original judgment amount (approximately $728,000 in consumer relief); and
- Pay a penalty of $40 million to the states, to be paid after consumers have received restitution.
State attorneys general focused on the judgments obtained in a state different from where the debtor resided because it impacted service members the most. Service members were often unable to travel to another state to defend themselves in court while stationed at a different state military base or overseas.
The approximate value of the restitution to Missouri consumers is $1,081,950, impacting an expected 390 consumers.
Consumers are encouraged to contact the Missouri Attorney General’s Office Consumer Protection Hotline at 1-800-392-8222 (outside MO:573-751-3321) if they have specific questions concerning the settlement.
