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Cooley Hurd

(26,877 posts)
Mon Jul 28, 2014, 09:15 AM Jul 2014

How to Swindle Soldiers

http://www.theatlantic.com/business/archive/2014/07/how-to-swindle-soldiers/375090/



Well, here is a clever new business strategy: Offer service members around the country and around the world financing for their appliances, furniture, and electronics, and then, when they fall behind on their loans, sue them in courts they can't get to to represent themselves.

Turns out: effective! Also: legal.

These are the conclusions of a new report jointly published by ProPublica and The Washington Post that looks at the financial "innovation" of USA Discounters and two other companies, Freedom Furniture and Electronics and Military Credit Services, that sell goods to service members on credit and then, if they fall behind, go after them in Virginia courts, regardless of where the service members are based. Together the three companies have filed 35,000 lawsuits in a little under a decade.

<snip>

For service members who don't appear in Virginia, a lawyer is appointed on their behalf. "But," Kiel writes, "the law does not specify what that lawyer must do." ProPublica found that in each of the 11 cases it examined, the same lawyer was selected as the defendant's representative, and he seems to have made minimal efforts on his clients' behalf. USA Discounters denied any "business relationship" with the attorney.

That USA Discounters' strategy lines up so perfectly with the SCRA loophole is, presumably, no accident. As John Odom, whom Kiel identifies as an expert on the SCRA, observes, "This looks like somebody who has really, really researched the best way to get around the entire intent of the SCRA."

</snip>



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How to Swindle Soldiers (Original Post) Cooley Hurd Jul 2014 OP
I'm not sure just what the "swindle" is? COLGATE4 Jul 2014 #1
Couple of things make these guys pernicious. DirkGently Jul 2014 #2
Army Pvt. Jeramie Mays was an idiot. linuxman Jul 2014 #4
None of which excuses the scumbaggery of the store of course. DirkGently Jul 2014 #5
Doesn't meet my definition of a "Swindle" linuxman Jul 2014 #3

COLGATE4

(14,732 posts)
1. I'm not sure just what the "swindle" is?
Mon Jul 28, 2014, 10:14 AM
Jul 2014

Any person, servicemember or not who buys appliances, furniture, etc. on credit knows that failure to pay on time will eventually result in collection being undertaken. Servicemembers are not immune from this reality - in fact,the company will usually first contact the servicemembers' commanding officer who will ensure that payment is made. Eventually if payment is still not made, collection suits are undertaken. Generally speaking, there are few legal defenses to nonpayment.

To be sure, these stores (and many others) may charge a higher price than some other sectors but this is due in great part to having a larger number of defaults on payment.

DirkGently

(12,151 posts)
2. Couple of things make these guys pernicious.
Mon Jul 28, 2014, 10:43 AM
Jul 2014

First, they appear to set up near military bases and charge exorbitant financing fees to young soldiers, under a veneer of being super patriotic or something.

The final tally on the loans can be staggering for some young service members. In 2009, Army Pvt. Jeramie Mays, then 26, walked into the USA Discounters near Fort Bliss in Texas to buy a laptop before being deployed to Iraq. He chose a model that typically retailed for $650. At USA Discounters, it sold for $1,799. On top of that came $458 in add-ons. After another $561 in interest charges, Mays walked out owing $2,993 in payments over 23 months, according to a copy of his contract.


Next, they take advantage of a part of Virginia law that allows corporations to file lawsuits themselves, which circumvents part of the Fair Debt Collection Practices Act that normally keeps a retailer from suing someone outside of the state in which they live:

On every active-duty service member's contract ProPublica examined, just below various disclosures, it says the buyer "is subject to the jurisdiction of the state courts of the COMMONWEALTH OF VIRGINIA." To receive financing, customers must agree.

Such a demand is "abusive" and is not typically found in contracts involving consumers, said Carter of the National Consumer Law Center. The Federal Debt Collection Practices Act prohibits such suits if they are filed by a third party, such as a law firm. Because USA Discounters uses a company employee to file its debt collection suits, the law doesn't apply.

http://www.propublica.org/article/thank-you-for-your-service-how-one-company-sues-soldiers-worldwide

I'm not clearly seeing what part of the Service Members Civil Relief Act is being abused, but the basic idea there is that active service people can delay a court action against them by request. That's tougher when the court in question is far away, even though this company apparently hires a lawyer (the same guy almost every time) to send the defendants a letter simply telling them they can request one.

So, they get soldiers and sailors to finance a lot of goods at terrible terms with a lure of some kind of happy Go America marketing, then aggressively sue and garnish their wages when then almost inevitably fail to pay, while taking advantage of of loopholes in at least two different laws designed to protect people from this precise kind of predatory lending.

Nice.

 

linuxman

(2,337 posts)
4. Army Pvt. Jeramie Mays was an idiot.
Mon Jul 28, 2014, 10:51 AM
Jul 2014

Who can't perform a two second Google search to find out they're shopping in the wrong place?

These stores aren't some new, big secret. They are known and avoided by every serviceman with even the smallest amounts of intelligence. If they disappeared tomorrow, the same idiots that buy crap there would get suckered into some other BS thing to burn up all their money. Probably Amway.

Seriously. Who buys something over $50.00 without price checking other retailers?

DirkGently

(12,151 posts)
5. None of which excuses the scumbaggery of the store of course.
Tue Jul 29, 2014, 02:18 PM
Jul 2014

Everyone in the business of screwing people over claims their victims should just have known better. Well yes, ideally, no one would ever be fooled by a despicable, craven scheme to trick or exploit American soldiers or anyone else. In a perfect world, everyone would know everything and no one could be exploited.

We don't live in that world, so generally, we have laws against taking unfair advantage. These guys are carefully side-stepping those laws, and are therefore assholes.
 

linuxman

(2,337 posts)
3. Doesn't meet my definition of a "Swindle"
Mon Jul 28, 2014, 10:46 AM
Jul 2014

When I was a Marine I knew lots of guys who bought crap at these stores.

None of them were financial geniuses anyway, and I doubt that their defaults on their $1,500 futon ruined them any more than the rest of their poorly thought-out purchases/decisions.

You sign an agreement when you buy something on credit at these places. Yeah, the terms suck, but there is no gun to your head.

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