Millions going back to Military families and veterans after settlement

RICHMOND, Va. (WAVY) — A major settlement is putting money back in the pockets of thousands of Virginia veterans and military families.

The settlement will result in more than $10.5 million to more than 8,000 Virginia customers, and nearly $100 million of forgiven debt and restitution nationwide.

According to a release from Virginia Attorney General Mark Herring, Virginia has successfully led the negotiation of a settlement between 49 states, plus the District of Columbia, and retailer USA Discounters. This to resolve the states’ claims of deceptive trade practices by the company against its customer base of largely military families and veterans.

USA Discounters had several locations in Hampton Roads including Newport News, Virginia Beach and Norfolk. The company filed for bankruptcy in 2015 and closed its doors.

“I’m proud that Virginia was able to take a leadership role in resolving these really serious allegations of abusive and illegal business practices aimed directly at veterans and service members in Virginia and around the country,” said Attorney General Herring. “It’s just shameful that a company would base its business model on deceptive and abusive practices directed toward service members and veterans.

“This is the biggest multi-state consumer settlement successfully led by the Commonwealth of Virginia,” said Attorney General Herring. “We have secured significant relief for folks who still owe money and those who were taken to court by USA discounters.”

According to the release:

Attorney General Herring and his colleagues alleged that USA Discounters broke the law by engaging in unfair, abusive, false and deceptive acts and practices in its advertising, during the loan origination process, and during the collection process. These alleged practices included abuse of the military allotment system to pay for overpriced goods with high interest rates and inappropriate contact with service members’ chain of command which may have caused some service members to lose security clearances and face demotions.

To resolve the states’ allegations, USA Discounters has agreed to wipe out a significant amount of outstanding consumer debt, provide restitution credits, and correct consumers’ credit reports. The total estimated value to consumers for these restitution measures is approximately $95.9 million, primarily benefiting active and veteran service members.  Namely, USA Discounters agreed to:

  • Wipe out all remaining debt for customers who purchased goods on or before June 1, 2012 and correct the negative comment from the company on those consumers’ credit reports (Approximately $71 million nationally, $9.39 million for Virginians);

  • Apply a $100 credit to all customers who purchased goods after June 1, 2012, which were not discharged in bankruptcy, and correct the negative comment from the company on those consumers’ credit reports (Approximately $2.89 million, $443,000 for Virginians);

  • Wipe out all judgments that were not obtained in the correct state, and correct the negative comment from the company on those consumers’ credit reports (Approximately $21.2 million, approximately $366,000 for Virginians);

  • Provide a 50% credit to all members of the military that had a judgment entered against them in the correct state (Approximately $728,000, $322,000 for Virginians);

  • Incur a penalty claim of $40 million to the benefit of the states.   This $40 million penalty is expected to keep USA Discounters from ever reopening and engaging in these tactics and practices.