Targeted service members get millions in relief, North Carolina AG Cooper announces
RALEIGH (WTVD) -- North Carolina Attorney General Roy Cooper announced Thursday that service members who were victims of "shady practices" by a company that set up furniture shops near military bases will have their debts forgiven and given refunds.
Cooper joined the Virginia Attorney General's Office and the Consumer Financial Protection Bureau (CFPB) to file a complaint and judgment in federal court in Virginia against Freedom Furniture, Inc., Freedom Acceptance Corporation (FAC), Military Credit Services, LLC (MCS) and owners John F. Melley and Leonard B. Melley, Jr. for violations of state and federal laws on credit and debt collection.
"Military service members work hard to protect our country, but unfortunately their steady paychecks can make them targets for shady practices," Cooper said. "We won't tolerate unscrupulous businesses that take advantage of military consumers in North Carolina."
Freedom Furniture is a national retailer that sells furniture, electronics, jewelry and other products online and at 14 retail locations near military bases, including one in North Carolina near Fort Bragg in Fayetteville. FAC services credit and collects debts on behalf of Freedom Furniture, and MCS extends credit for purchases made by military consumers at independent retailers.
Under the judgment, Freedom Furniture, FAC and MCS will pay more than $2.5 million in consumer relief and $100,000 in civil penalties. Consumer relief includes $2.2 million in debt forgiveness and $373,279.06 in refunds for consumers who had default judgments entered against them in court as a result of the debts.
In North Carolina, 311 affected consumers including around 180 service members will receive about $234,000 in refunds and debt forgiveness. The furniture company must also adjust the amount owed by consumers with the credit reporting agencies. Eligible consumers will receive their refunds directly from the CFPB.
According to officials, when a service member purchased an item from Freedom Furniture, the company usually set up a monthly draft from the consumer's paycheck, or military allotment for service members. Consumers were also required to provide a backup method of payment in case their allotment stopped or wasn't enough to cover the monthly draft. For many service members, this backup method was a spouse's or parent's credit or debit card.
The investigation revealed that FAC and MCS often double billed customers for monthly payments.
The complaint stated that FAC and MCS collectors sometimes contacted service members' commanding officers about their debts, which could harm their opportunities for promotion. They also routinely filed lawsuits in Virginia courts against North Carolina consumers, even though state law requires that debt collection suits be brought in the county in North Carolina where the debt occurred.
