Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

FOR IMMEDIATE RELEASE:

More than 2,400 Washington customers to receive relief from retailer

OLYMPIA — Washington Attorney General Bob Ferguson announced today that Virginia-based retailer USA Discounters will provide more than $2.1 million in relief to service members who entered into contracts in Washington state over allegations the company engaged in unfair, abusive and deceptive debt collection practices.

USA Discounters agreed to provide relief to more than 2,400 former and current Washington state customers, primarily active and veteran service members, the company’s target customer base. 

The relief for Washington consumers constitutes part of a larger agreement involving 48 other states and the District of Columbia worth more than $85 million. Ferguson’s office was part of the executive committee that negotiated the agreement.

USA Discounters, also doing business as USA Living and Fletcher’s Jewelers, sold 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.

The company operated two stores in Washington — a USA Discounters outlet near Joint Base Lewis-McChord and a Fletcher’s Jewelers in the Tacoma Mall.

Ferguson’s office and the other Attorneys General accused USA Discounters of selling overpriced household goods at high interest rates, often using the military allotment system to guarantee payment. The company obtained business through misrepresentations and omissions in advertising, during a loan’s origination and during the collection process, the states claim.

For example, a Lakewood customer shopped at USA Discounters for a set of truck tires and wheels worth about $2,300. The customer understood, based on the company’s advertising, that there would be a 2.75 percent mark-up on the purchase, but the company’s mark-up was actually 2.75 times the purchase price, plus 24 percent interest over three years. The terms would have made the total cost for the tires and wheels more than $11,000.

Washington service members also complained of USA Discounters’ abusive debt collection tactics. One reported that the company called his chain-of-command and friends, sharing inaccurate and confidential information about his alleged debt. Another reported persistent collection calls at 5 a.m., continuing even after reaching a debt repayment plan agreement with the company.

USA Discounters also filed nearly all of its collection lawsuits in a few Virginia jurisdictions, no matter the service member’s location, deployment status or residence. Service members were often unable to travel to another state to defend themselves in court while stationed at a military base in a different state or overseas.

A sailor stationed in Washington called the company to inquire about repairs on products he had purchased, and was told the company was out of business. He also noticed his military allotment payments to the company had stopped. Several months later, he received a warrant from a Virginia court for indebtedness, having never received a letter from the company that he was past due. He was unable to travel to Virginia to defend himself against the warrant.

Of the nearly 170 judgments USA Discounters obtained against Washington customers, only three were filed in the proper venue — either in the state where the products were purchased or in the service member’s current state of residence.

USA Discounters closed most of its stores in the summer of 2015 and later declared bankruptcy.

“Protecting our veterans and service members has been one of my top priorities since the day I took office,” Ferguson said. “I won’t allow companies like USA Discounters to exploit our men and women in uniform for financial gain.”

For customers who entered into contracts in Washington state, USA Discounters will:

  • Write off 453 accounts with a total of $1.13 million in balances for customers whose last contract was dated June 1, 2012 or earlier, and correct negative entries from the company on those consumers’ credit reports;
  • Apply up to a $100 credit to 1,804 accounts whose contracts were dated after June 1, 2012 that were not discharged in bankruptcy, and correct negative entries from the company on those consumers’ credit reports;
  • Write off 165 judgments worth a total of $801,000 not obtained in the correct state, and correct negative entries from the company on those consumers’ credit reports; and
  • Offset three 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, for a total of about $9,300.

As part of the agreement, USA Discounters also agreed to pay a penalty of $40 million to the states, which will be applied to claims in the company’s bankruptcy case.

If you have any questions about the USA Discounters agreement, contact Assistant Attorney General John A. Nelson at (206) 389-3842.

-30-

The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Visit www.atg.wa.gov to learn more.

Contacts:

Peter Lavallee, Communications Director, (360) 586-0725; PeterL@atg.wa.gov

Topic: