Lawmakers call for probe into military collection practices
FAYETTEVILLE (WTVD) -- Orson West is all too familiar with the appeal of retailers like USA Discounters. They offered him credit when he needed it the most -- following a separation during a tour at Fort Lewis McChord in Washington.
It was easy and convenient -- no questions asked.
"For the military, it's automatically approved. So that's how they get you in," said West, referring to credit offers. "But you don't realize the interest rate until you actually sign the paperwork and you're automatically trapped."
Four years later, West is still paying on that bedroom suite, computer and rims.
"I think I paid twice as much," said West. "For the stuff I bought, I think I paid twice as much."
It's the type of lending practices that leads to a collection nightmare, according to a recent national report that's behind lawmakers' call for a federal probe into USA Discounters and similar retailers.
The Washington Post alongside the investigative journalism non-profit ProPublica recently published a report alleging the retailer aggressively collects debt from service members through involuntary wage garnishments and court summons outside of its Virginia-base.
Lawmakers said they are concerned the possibility of litigation, noted in fine print contracts, makes it difficult for service members to defend themselves in court as they are transferred from duty station to duty station across the world. They note concern of a violation of the Servicemembers Civil Relief Act, meant to "protect legal interests of servicemembers who often face unique financial circumstances as a result of their deployment or service to our nation."
Five U.S. Senators, Jeanne Shaheed (D-NH), Jack Reed (D-RI), Richard Blumenthal (D-CT), Mark Warner (D-VA) and Tim Kaine (D-VA) are calling for a federal probe into the report allegations. Last week, they sent a letter to the Consumer Financial Protection Bureau and Department of Defense urging them to investigate business relationships between the military community, USA Discounters and similar retailers.
North Carolina's Attorney General Roy Cooper has taken it one step further, urging military members to come forward with complaints against USA Discounters. The office said it has received a 2011 complaint from a Fort Bragg consumer, saying "our office has concerns about this company and would welcome consumer complaints from anyone who has had trouble with them."
Cooper joined Fort Bragg leaders two weeks ago in announcing a $92 million debt forgiveness settlement against a Fayetteville-based subprime lender and retailer. The move relieved military members of debt resulting from sky high interest rates, as the state and military leaders denounced predatory lending.
USA Discounters, which operates more than 30 stores nationwide, including one off Bragg Boulevard in Fayetteville, rejects accusations it's taking advantage of the military community.
In a statement responding to the Post and ProPublica report, the retailer said it is "transparent about its policies," with prices and terms that are "clearly marked and described so customers can make informed decisions about whether a purchase is right for them."
The statement also outlines legal action as a last resort in the collections process, noting less than 1 percent of its military customers are subject to garnishment as a result of payment default.
The company's statement and Washington Post Letter to the Editor also noted flawed reporting that failed to get to the root of individual account default circumstances highlighted in the story.
"The company asked ProPublica to obtain permission from these customers for us to release those details-which would have told a very different story than the one they reported," the statement read.
Cooper's office said it welcomes consumer complaints from anyone who has had trouble with USA Discounters by filling out an online form at ncdoj.gov, or calling 1-877-5-NO-SCAM. It remains unclear what action, if any, the DOD or CFPB plan to take.
