WASHINGTON -- The Consumer Financial Protection Bureau on Thursday ended a scam run by USA Discounters Ltd., a company that operates a chain of retail stores near military bases and offers financing for purchases, according to a news release.
The CFPB said it has obtained more than $350,000 in refunds for service members harmed by this scam, and USA Discounters will pay an additional $50,000 civil penalty.
"Today we shut down USA Discounters' fee scam that was designed to exploit unsuspecting servicemembers," CFPB Director Richard Cordray said in the news release. "Targeting servicemembers with scams disguised as legal benefits is unconscionable, and we will not allow this injustice to continue."
USA Discounters has 31 stores across the United States, most near military bases.
Investigative journalists at ProPublica first wrote that USA Discounters had deceived thousands of service members into paying fees for legal protections they already had and for certain services that the company failed to provide.
In military newspapers and magazines, and on radio and TV, the company's ads shout, "NO CREDIT? NEED CREDIT? NO PROBLEM!"
When customers fell behind, the company transformed into an efficient collection operation.
USA Discounters then filed lawsuits against servicemembers based anywhere in the world, no matter how much inconvenience or expense they would incur to attend a court date near the company's Virginia headquarters. Since 2006, the company has filed more than 13,470 suits and almost always won, ProPublica reported.
USA Discounters Ltd. is a privately held company based in Norfolk, Va., that operates a chain of retail stores across the country and sells furniture, electronics, bedding, and appliances. Most stores are located within a few miles of military bases, and USA Discounters uses standardized contracts tailored to members of the U.S. Armed Forces when dealing with active-duty servicemembers.