FOR IMMEDIATE RELEASE
NEWS RELEASE
September 30, 2016
For More Information, contact:
Luther Strange
Mike Lewis (334) 353-2199
Alabama Attorney General
Joy Patterson (334) 242-7491
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AG STRANGE ANNOUNCES SETTLEMENT WITH USA DISCOUNTERS
(MONTGOMERY) -Alabama Attorney General Luther Strange announced a
settlement today with retailer USA Discounters, also doing business as USA Living and
Fletcher’s Jewelers, along with 49 other state attorneys general, to resolve the states’
claims of deceptive trade practices by the company.
USA Discounters sold consumer products, including furniture, appliances,
televisions, computers, smart phones, jewelry and other consumer goods, principally on
credit. 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 Attorneys General 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. The states also alleged that USA Discounters
only filed its lawsuits in a few Virginia jurisdictions, no matter the service member’s
location, deployment status, or residence. In addition, the states alleged USA
Discounters sold overpriced household goods at high interest rates, often using the
military allotment system to guarantee payment. 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.
“This company victimized many consumers and particularly targeted those with
military or government service,” said Attorney General Strange. “These abusive and
deceptive practices will not be tolerated. I am pleased that we have been able to obtain
debt relief for many of its victims.”
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501 Washington Avenue * Montgomery, AL 36104 * (334) 242-7300
www.ago.state.al.us Page 2 of 2
USA Discounters agreed to provide relief to certain former and current
customers. The total estimated value to consumers for these restitution measures is
approximately $95.9 million, primarily benefiting active and veteran service members.
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); - 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); - Write off all judgments not obtained in the correct state, and correct the negative
comment from the company on those consumers’ credit reports (Approximately
$21.2 million); - 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); - Pay a penalty of $40 million to the states. This $40 million penalty will be
subordinated to all secured, administrative, priority, and unsecured claims that
are allowed in the bankruptcy case.
State Attorneys General focused on the judgments obtained in a state different
from where the debtor resided because it impacted service members the hardest.
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 consumers and the number of
consumers impacted in Alabama is yet to be determined.
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