On March 22, New York Attorney General Eric Schneiderman announced that his office reached a $540,000 settlement with Freedom Stores, a Norfolk, Virginia-based retailer that sold furniture and electronics in stores near military bases. Schneiderman said that the settlement will clear debt and judgments charged to 257 soldiers from New York serving at various locations across the United States.
The state claimed Freedom Stores used deceptive practices to lure soldiers into high-interest contracts for consumer purchases, which ruined the credit ratings of many of the service members. The now-defunct company was investigated for "deceptively selling them consumer goods at wildly inflated prices" and allegedly locking the soldiers into revolving credit agreements with undisclosed fees and high interest paid directly from military paychecks or personal bank and credit accounts to unlicensed lenders. Schneiderman said the negative credit reports in some cases threatened security clearances or ended military careers. Freedom Stores has been sued in Colorado, North Carolina, and Virginia, and by the Consumer Financial Protection Bureau over the legality of its debt collection practices.
The office found that the debts were aggressively pursued by Freedom Stores, often with no accounting on whether payments received were being applied to the debts. The office also found that collection on the contracts was against New York state law. According to the terms of the settlement, over 250 soldiers from New York will be contractually released by Freedom Stores and its finance arm from their debts and related judgments. The average soldier's balance was $2,100, and some were as high as $8,600. The company will also coordinate with credit reporting bureaus to remove negative trade lines related to the contracts.
"I am proud that we were able to wipe out the debts for hundreds of men and women who stand up for us every day," said Schneiderman. "We will keep working to root out fraud and protect our soldiers, who sacrifice so much to protect us."
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