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Press Release


For Immediate Release:
October 3, 2016

Office of The Attorney General
Christopher S. Porrino, Attorney General

Division of Consumer Affairs
Steve C. Lee, Director

Division of Law
Michelle Miller, Acting Director
  For Further Information and Media Inquiries:
Lee Moore (609) 292-4791

Attorney General Announces N.J. Participation in Multi-State Settlement with Retailer Accused of Exploiting Service Personnel

 

TRENTON – Attorney General Christopher S. Porrino announced today that New Jersey has joined a multi-state settlement with retailer USA Discounters that resolves allegations the company engaged in deceptive trade practices that were harmful in large measure to active U.S. military service personnel and veterans.

Under the settlement, USA Discounters – which also did business as USA Living and Fletcher’s Jewelers – has agreed to provide consumer restitution and other relief with an overall value of $95.9 million throughout the 49 participating states.

USA, which closed its stores in the summer of 2015 before declaring bankruptcy, sold a variety of products including furniture, appliances, televisions, computers, smart phones, jewelry and other consumer goods.

The retailer principally sold its products on credit, and typically marketed to current and retired service personnel through, among other things, a pledge that active military members, military veterans and government employees would never be denied credit for goods they purchased.

However, the participating states alleged that USA engaged in a number of unfair, abusive, false and deceptive practices that harmed service members. Specifically, they alleged that USA sold overpriced household goods at high interest rates, often using the military allotment system to guarantee payment. The states also accused USA of making misrepresentations and omissions in its advertising, as well as in providing credit.

In addition, the states accused USA of engaging in abusive debt-collection practices by constantly contacting service members’ chains-of-command, causing some military members to lose security clearances and face demotions.

USA also filed its debt-collection lawsuits in only a few Virginia jurisdictions -- no matter a service member’s location, deployment status or residence. This practice was particularly harmful, the participating states alleged, because service members often were unable to travel to Virginia to defend themselves in court while stationed at military bases in other states or overseas.

“The dishonest and exploitative practices alleged here would be unacceptable in any context, but they’re particularly troubling when you consider that the principal victims were people who’ve served our country,” said Attorney General Porrino. “There is no place for this kind of business conduct in New Jersey or anywhere else, and I’m glad we’ve been able, through our participation in this multi-state agreement, to obtain relief for New Jersey consumers who were harmed.”

Under the settlement agreement, USA has 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.)

Deputy Attorney General Patricia A. Schiripo, Assistant Section Chief of the Division of Law’s Consumer Fraud Prosecution Section, handled the USA Discounters matter on behalf of the State.

 

Last Modified: 2/8/2017 5:03 AM