USA Discounters Ordered to Pay $350,000 to Service Members
USA Discounters has been ordered to provide refunds to service members that were scammed into paying for protections that they already get for free.
The order, issued by the Consumer Financial Protection Bureau (CFPB), requires that USA Discounters to pay more than $350,000 in refunds to the service members involved in the scam and pay an additional $50,000 civil penalty.
USA Discounters, a Virginia-based retail company, operates chain stores that are strategically located near military bases. The stores sell furniture, electronics, bedding and appliances.
The company duped active military personnel into paying $5 for a company called SCRA Specialists LLC to be their representative with respect to their rights under the Service Member Civil Relief Act (SCRA), a federal program that offers some legal protections to active duty service members.
USA Discounters portrayed SCRA Specialists as an independent representative that would be available to receive notices of lawsuits filed by USA Discounters, inform USA Discounters of a change in the service member's address, and verify service member's military status to determine whether the service member was eligible for protection under the SCRA. As part of the federal program these protections are already provided for free.
These services were characterized as a benefit to service members, but they only helped USA Discounters sue them. In addition, many of the services were never actually performed. USA Discounters also misrepresented SCRA Specialists as an independent company working on service members' behalf, when in fact SCRA Specialists' sole source of revenue was USA Discounters' customers.
USA Discounters gave $4.50 of each $5 fee to SCRA Specialists. The fee was charged in more than 70,000 contracts and generated more than $350,000 since 2009.
Along with the financial penalty, USA Discounters will no longer be allowed to market these types of contracts or charge SCRA-related fees.