USA Discounters to forgive Virginia customers’ debts

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Virginia customers of former retailer USA Discounters will receive more than $10 million in debt forgiveness and restitution from a settlement announced Friday by Virginia Attorney General Mark R. Herring (Photo courtesy propublica.org)

Virginia customers of former retailer USA Discounters will receive more than $10 million in debt forgiveness and restitution from a settlement announced Friday by Virginia Attorney General Mark R. Herring (Photo courtesy propublica.org)

More than 8,000 Virginia consumers will reap a more than $10.5-million benefit from a lawsuit against former retailer USA Discounters, Virginia Attorney General Mark R. Herring announced Friday.

The relief will take the form of forgiven debt and restitution, a release from Herring’s office said. It comes as part of a nearly $100-million settlement agreement reached by forty-nine states and the District of Columbia against the retailer, which targeted largely military families and veterans.

USA Discounters, which shuttered its stores and declared bankruptcy in 2015, had outposts in several Virginia locations, including Virginia Beach and Norfolk.

“It’s just shameful that a company would base its business model on deceptive and abusive practices directed toward service members and veterans,” Herring said in the release. “We’re sending a clear signal that we aggressively pursue businesses that abuse Virginia consumers, especially any that prey on veterans and service members.”

USA Discounters sold consumer goods such as furniture, appliances, televisions, computers, smart phones and jewelry, the release said. Customers financed many purchases and the retailer’s marketing said members of the military and veterans would not not be denied credit, according to the release. The stores were generally located near military bases.

The multi-state lawsuit alleged deceptive trade practices, including abuse of the military allotment system, the release said. The states also alleged that USA Discounters engaged in abusive collection practices, filing collection cases in Virginia, regardless of where the customers lived. Those practices led to the entry of default judgments against service members who couldn’t travel to Virginia to appear in court, or who might not have known they had been sued, according to the release.

As part of the settlement, USA Discounters agreed to: wipe out remaining customer debt dating to on or before June 1, 2012 and correct negative information on consumer credit reports; give a $100 credit to customers who bought products after June 1, 2012 that were not discharged in bankruptcy and correct negative information on consumer credit reports; extinguish judgments that were obtained in the wrong states and correct any related negative credit information; give a 50-percent credit to military customers who had judgments entered against them in the correct states; and incur a $40 million penalty to the participating states.

The settlement agreement has been filed in and approved by the U.S. Bankruptcy Court in Delaware; it will go into effect on Oct. 14, 2016, the release said.

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