A company accused of targeting service members with high-cost loans and predatory practices will provide nearly $96 million in forgiven debt and restitution for thousands of customers, most of whom are in the military or veterans, under a 49-state settlement.





The settlement, announced Friday by the states, will force the company, USA Discounters, to wipe out a large amount of outstanding consumer debt, provide restitution credits and correct consumers' credit reports, according to the Virginia state attorney general's office. More than 8,000 consumers in Virginia alone will receive more than $10.5 million in restitution.



The only state not included in the settlement was Colorado, which previously settled with the company under similar claims.





USA Discounters, also doing business as USA Living and Fletcher's Jewelers, sold furniture, appliances, televisions, computers, smart phones, jewelry and other consumer goods, and financed many of the sales on credit. They marketed their products mostly to military members and veterans, and many of the stores were located near military bases.





The company sold overpriced household goods at high interest rates, often using the military allotment system to guarantee payment, the states alleged.





Officials at USA Discounters could not immediately be reached for comment.





The company closed its stores in the summer of 2015, and later declared bankruptcy.



But the company had looped service members into bad finance contracts where the business continued to collect money, even after their stores closed down, according to the New York attorney general's office.



Most of the $96 million in restitution will come in the form of write-offs of debt, and credits to customers. The settlement requires the company to release them from the debt.



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The company must:





write off all accounts with balances for customers whose last contract was dated June 1, 2012, or earlier;

apply a $100 credit to all accounts whose contracts were dated after June 1, 2012;

write off all judgments not obtained in the correct state; and

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.

The company must also correct their negative comments on the consumers' credit reports.



The states alleged the company engaged in unfair, abusive, false and deceptive practices, including hooking service members into "deceptively usurious loans, false advertising and illegal collection practices," according to the New York state attorney general's office. "The company would also sue service members out of state where they were unable to defend the action, ultimately taking default judgments against them," that office stated. In New York, the settlement will affect about 759 consumers, with restitution of about $1.8 million.





The state attorneys general focused on the judgments obtained in a state different from where the consumer lived, because those had the most harmful effects on service members. Those troops were often unable to travel to another state to defend themselves in court, according to the New York attorney general's office.





Service members will have more protections against loans with high interest rates as new Defense Department rules go into effect on Oct. 3, when lenders will be required to comply with a 36 percent interest rate cap on all loans to military personnel and their dependents, including fees.





The 36 percent rate cap applies to all loans except for mortgages and money purchase loans, such as vehicle loans.





Previously these rules applied only to payday loans, vehicle title loans, and refund anticipation loans.



Karen Jowers covers military families, quality of life and consumer issues for Military Times. She can be reached at kjowe rs@mi litar ytime s.com .

