Consumer News

AG Derek Schmidt: More than $1 million to be returned to Kansans by bankrupt retailer that targeted military families

Release Date: Oct 13, 2016

TOPEKA – (October 13, 2016) – Kansas consumers will receive more than $1 million in loan write-offs and account credits under a settlement reached last week with a company that targeted sales of jewelry and other items to military families, Kansas Attorney General Derek Schmidt announced today.

USA Discounters, which also did business as USA Living and Fletcher’s Jewelers, sold consumer products, including furniture, appliances, televisions, computers, smart phones, jewelry and other consumer goods principally on credit. USA Discounters typically marketed to members of the military and veterans, advertising that military, veterans and government employees would never be denied credit for goods purchased from the retailer.

Schmidt and the attorneys general of 49 other states recently reached a settlement with the company to resolve allegations that it engaged in unfair, abusive, false and deceptive acts and practices. These allegations include that, in collecting on consumer debts, USA Discounters engaged in abusive tactics, constantly contacted service members’ chains-of-command and caused some service members to lose security clearances and face demotions. The states also alleged that USA Discounters filed its collection lawsuits in Virginia jurisdictions, no matter the service member’s location, deployment status or residence. This made it difficult or impossible for service members or their families to travel to another state to represent themselves in court in these collection proceedings.

In addition, the states alleged USA Discounters sold overpriced household goods at high interest rates, often using the military allotment system to guarantee payment. These unlawful business practices, the states claim, were secured through misrepresentations and omissions in advertising, during the loan’s origination, and during the collection process.

Virginia-based USA Discounters closed its stores in the summer of 2015, including a store in Junction City near Fort Riley. It later declared bankruptcy, and the states' settlement agreement has been filed as part of the bankruptcy proceedings.

“The high stress and burden placed on military families are not an invitation for businesses to engage in deceptive practices,” Schmidt said. “Our Kansas consumer protection laws include special protections for military families and veterans, and this settlement will return money to those families who did business with this company.”

USA Discounters agreed to provide relief to certain former and current customers. The total estimated value to consumers for these restitution measures to Kansas consumers is more than $1 million, primarily benefiting active and veteran service members. Namely, USA Discounters agreed to:

  • Write off all accounts with balances for customers whose last contract was dated June 1, 2012, or earlier, and correct the negative comment from the company on those consumers’ credit reports;
  • Apply a $100 credit to all accounts whose contracts were dated after June 1, 2012, which were not discharged in bankruptcy, and correct the negative comment from the company on those consumers’ credit reports;
  • Write off all judgments not obtained in the correct state, and correct the negative comment from the company on those consumers’ credit reports; and
  • Credit all judgments that were obtained in the correct state against members of the military with a credit equal to 50 percent of the original judgment amount.

Affected consumers will be contacted regarding their eligibility for restitution. Consumers who believe they are eligible may also contact the attorney general’s Consumer Protection Division at (800) 432-2310 or online at www.InYourCornerKansas.org.

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