New York AG Settles with Retail Financing Company that Allegedly Lured Servicemembers into Revolving Credit Contracts

On March 22, 2017, the New York Attorney General’s Office (“New York AG”) announced that it had entered into a $540,000 settlement with a Virginia retailer and financing company that allegedly used deceptive practices to lure military servicemembers into financing agreements for the purchase of consumer goods.

The New York AG alleged that the companies sold servicemembers consumer goods at inflated prices, and locked them into revolving credit agreements with undisclosed fees and high interest rates, which were paid from military paychecks or personal bank and credit accounts to unlicensed lenders. The companies then aggressively pursued and collected the debts arising from these purportedly unlawful contracts, in violation of New York law.  According to the New York AG, the debts associated with these contracts tainted servicemembers’ credit, and in some instances, threatened their security clearances or ended their military careers.

Under the terms of the settlement agreement, the companies agreed to release 257 servicemembers from their remaining debt (which averaged $2,100 per servicemember), to clear all negative credit reporting related to the allegedly unlawful contracts, and to vacate judgments secured against the servicemembers.