"Company That Sued Soldiers Closes Its Stores"

2015-08-20T14:45:57-04:00

From: Military.com

For the first time in its history, USA Discounters is living up to its name. For years, the company has specialized in selling marked-up appliances, electronics and furniture to service members through high-priced loans. But these days, it's just the place for a soldier to go for a steal on a bedroom set or a washer. The company's website used to shout "Bad Credit? Slow Credit? No Credit? No Problem!" Now it's "ENTIRE STORE ON SALE!"

The chain, which once had 24 stores, almost all right outside military bases around the country, has been holding a rolling going out of business sale. The closures follow our investigation of the company's lending practices last summer and a subsequent series of government inquiries and Department of Defense actions.

USA Discounters did not respond to our calls and emails seeking comment. Just seven of the company's two dozen stores remain open – and those are furiously selling off merchandise at discounts of "70%–95% OFF," according to the company's website.

ProPublica's investigation, which also ran in the Washington Post, detailed how the company guaranteed credit to service members for items that sometimes sold for two to three times the typical retail price. If borrowers fell far behind on their loans, USA Discounters sued them in Virginia state court, regardless of where the purchases were made. Between 2006 and last July, USA Discounters had filed more than 13,000 suits in Virginia courts —almost always winning— and seized the pay of more active-duty military than any company in the country.

Another retailer featured in the story, Freedom Furniture and Electronics, is also closing.

Following our story last year, a group of senators sent letters to federal regulators urging them to investigate USA Discounters and toughen up laws and regulations to address the lending and collection issues highlighted in the article. A spokesman for the Consumer Financial Protection Bureau (CFPB) said the agency does not comment on investigations.

The company initially reacted by issuing a press release calling ProPublica's reporting inaccurate, though it identified no errors. Later, USA Discounters announced it was changing the name of its stores to "USA Living" and reforming its collection practices. It would still sue service members in a court that might be hundreds of miles from where they are based, but customers would be clearly notified of the impending action and given the option to be sued closer to home. It was a change a consumer advocate described as "a little less bad" than before.

Then, late last year, the Defense Department announced a big change that seemed likely to dramatically change the way the company did business. As we detailed in our story, USA Discounters' military customers almost always set up payments through the military's allotment system. That ensured that with every paycheck, USA Discounters got paid first. In one letter after ProPublica's story, five senators urged the Department to accelerate an already ongoing review of the system.

The Department's new policy prevents retailers like USA Discounters from using allotments as a form of payment and eliminated "that aspect of the allotment system most prone to abuse by unscrupulous lenders that prey on our service members," as a Department press release put it.

Both USA Discounters and Freedom told us last year that the change to allotments would not have a major impact on their business.

Separately the company also entered into a settlement with the CFPB last year over a $5 fee the company charged its military customers.

The new year brought more complications. In April, USA Discounters was hit with a class action lawsuit. In July, Colorado's attorney general filed suit, calling the company's practice of filing lawsuits in Virginia against Colorado-based service members "unconscionable." North Carolina's attorney general has announced an investigation of the company, which a spokeswoman said was ongoing.

USA Discounters continued filing lawsuits against service members in Virginia courts until May of this year, but recently it has dropped almost all of its open suits against out-of-state defendants, court records show. At a court date in Virginia Beach General District Court earlier this month, 60 lawsuits were on the docket. Defendants were based at Fort Bragg, Fort Polk, Fort Benning, and Fort Hood, among other installations in states from Georgia to Washington. The company dropped all but two of the suits.

Freedom has also been under scrutiny. Last year, the company settled with the CFPB and attorneys general in Virginia and North Carolina over their debt collection practices. The company agreed to credit or refund customers $2.5 million, pay a penalty of $100,000, and stop filing lawsuits in Virginia courts against out-of-state service members. Separately, Colorado's attorney general has also sued the company.

But, in a statement, Freedom said its decision to close down had nothing to do with the change to allotments or lawsuits by regulators. Instead, it was due to increased competition from the lease-to-own industry and the fact that "the price of televisions and other consumer electronics, which make up half of our sales, has decreased significantly," said spokeswoman Elizabeth Heaton.

http://www.military.com/daily-news/2015/08/16/company-that-sued-soldiers-closes-its-stores.html

Response by LCDR Private RallyPoint Member made Aug 20 at 2015 2:48 PM

2015-08-20T14:48:59-04:00

Sounds like a good time to go shopping!

Still be careful that the prices weren't all inflated before their "discounts" though. This seems to be a legitimate fire sale however.

Response by SSgt Alex Robinson made Aug 20 at 2015 3:24 PM

2015-08-20T15:24:30-04:00

Good riddance

Response by SSgt Alex Robinson made Aug 20 at 2015 3:26 PM

2015-08-20T15:26:56-04:00

Where was his due process? This sounds political to me

Response by SSgt Alex Robinson made Aug 20 at 2015 3:30 PM

2015-08-20T15:30:14-04:00

I'm at a loss. I love the Gulf and would hate to see someone get hurt or further damage to such a glorious place.

Response by SSgt Alex Robinson made Aug 20 at 2015 3:32 PM

2015-08-20T15:32:38-04:00

It may help them win. The American population as a whole wants something done about illegal immigration and this may be a good first step.

Response by SSgt Alex Robinson made Aug 20 at 2015 3:33 PM

2015-08-20T15:33:38-04:00

Is this a PTSD victim?

Response by LCpl Mark Lefler made Aug 20 at 2015 4:18 PM

2015-08-20T16:18:52-04:00

good riddance.

Response by 1SG Private RallyPoint Member made Aug 20 at 2015 11:41 PM

2015-08-20T23:41:59-04:00

I think that businesses like this are about as ubiquitous as massage parlors, used car dealerships, and boot re-soling stores. They are just about everywhere. The business practices are unethical, and marginally legal. Many are on post off-limits lists.
My advice to all the Soldiers out there that just have to have the latest gizmos is the same today as it ever was:
Caveat Emptor
(let the buyer beware)

Response by Sgt Matt Koeneman made Aug 21 at 2015 12:43 AM

2015-08-21T00:43:42-04:00

This makes me happy. When wifey separated from the Corps, her allotment to this store stopped. I received notification 2 years later that we were being sued by them for the remainder of the balance. 2 years!!!!

Response by PO1 John Miller made Aug 21 at 2015 7:01 AM

2015-08-21T07:01:33-04:00

Bye Felicia...

Response by SGT Ben Keen made Aug 21 at 2015 11:19 AM

2015-08-21T11:19:44-04:00

The question I have is doesn't everyone do some price shopping before buying stuff? I mean at two to three times the typical retail price, I'm sure you could have gone elsewhere and found what you needed at a much better cost. I'm not excusing what this business did, it is awful and I'm glad to see their doors closing but we can't excuse ourselves from being part of the problem. It's like when you get those "pre-approved" credit cards in the mail, everything looks great until you see the rate is 40%, so that $100 purchase would actually cost you $140 with all the fees.

Response by SGM Steve Wettstein made Aug 21 at 2015 11:25 AM

2015-08-21T11:25:58-04:00

Response by SSG(P) D. Wright Downs made Oct 15 at 2015 8:27 PM

2015-10-15T20:27:12-04:00

Becareful of those going out of business sales. The consigne market up the prices at the start of the sale to get as much as he can. The best prices are at the end when there is very little left in the stores. Then it is dirt cheap. i have worked for stores that have gone out of business. I have seen the difference of the prices on the furniture.

Response by MAJ Ken Landgren made Oct 24 at 2015 8:20 AM

2015-10-24T08:20:26-04:00

Is this another case of retired military screwing our military folks?

Response by LTC John Shaw made Oct 24 at 2015 8:29 AM

2015-10-24T08:29:52-04:00

Love to see companies like this go out of business!
I understand the desire to make money, I don't understand the desire to be unethical and rip off people to do it. Organizations that lack integrity will shutdown, they can't survive their own deceit.

Response by SGM Erik Marquez made Nov 7 at 2017 7:01 AM

2017-11-07T07:01:24-05:00

USA Discounters, Ltd., d/b/a USA Living and d/b/a Fletcher's Jewelers
Fletcher's Jewelers is a sister company with the same owners and same predatory lending practices ...I was about to "warn" of that but a little looking around and it seems they are closing or closed those stores as well.

I have no doubt after Chap 11 is complete, the parent company ownership predators will find a new way to take from the military members

Response by SGM Erik Marquez made Nov 7 at 2017 7:21 AM

2017-11-07T07:21:09-05:00

And just to warm your hearts, AFTER all the trouble they got into and AFTER deciding to close , file Chap 11, and AFTER they had been slapped with fines at the FED level and AFTER they had settled two multi million settlement with those suing them.....
More a group of Attorney Generals ganged up on them and won a total of 96 million dollars in settlement costs.

https://consumerist.com/2016/09/30/scammy-bankrupt-usa-discounters-to-pay-96m-for-targeting-then-suing-armed-forces-customers/

https://consumermediallc.files.wordpress.com/2016/09/usadiscounterssettlement.pdf

That ought to put a dent in their capital fro the next predatory business they planned on starting after chap 11 was done with USA Discounters, LTD, with is also USA Living and Fletcher’s Jewelers

Scammy, Bankrupt “USA Discounters” To Pay $96M For Targeting, Then Suing Armed Forces Customers

Two years ago, we told you about the not-at-all a discount retailer called USA Discounters that targeted active-duty servicemembers, and not only trapped a number of them in high-cost installment p…

Response by PO3 Donald Murphy made Nov 7 at 2017 8:32 AM

2017-11-07T08:32:18-05:00

Well, to be fair, you know what your credit is like. You know how bad/good it is. And you know what you can and can't get. 300% interest is wonderful if you can't get credit. Its also a lesson; nothing in life is free. Hopefully the Private, Airman or Seaman will have gained some credit from the transaction and learned to be more prudent.

Cheers and applause are nice, but please...we're angry at McDonalds for making us overweight...

Response by SSgt Boyd Herrst made Sep 5 at 2019 6:05 AM

2019-09-05T06:05:02-04:00

It would be easier to put them off-limits /out of bounds .. for their unscrupulous practices.