Members of U.S. Military Subjected to Aggressive Collection Tactics of Litigious Loan Operation

Tuesday, July 29, 2014
(photo: Sverre Haugland/Cultura/Getty Images)

A Virginia-based retailer has been aggressively going after members of the U.S. military who have fallen prey to its collection tactics after customers miss payments on overpriced household goods.


USA Discounters has been described by members of the military as “ruthless” in suing them, including those stationed overseas once they fall behind on payments for appliances, computers, jewelry and other items that are sold for prices far higher than in big-box stores.


Military personnel are supposed to be shielded from such litigation under the Servicemembers Civil Relief Act (pdf) (SCRA). But nothing in the law prevents a company like USA Discounters from choosing where to file lawsuits. In these cases, the sales contract requires that the venue is Virginia, even if the customer made the purchases elsewhere. Often, that means a defendant would have to travel across country or even the world to appear before a civil court.


“This looks like somebody who has really, really researched the best way to get around the entire intent of the SCRA,” John Odom, a retired Air Force judge advocate and expert on the SCRA, told ProPublica.


Over the past eight years, USA Discounters has filed more than 13,470 lawsuits, according to the investigative news website, which found the lender almost always wins. And with a court victory in hand, the company can then garnish the wages of service members—something it does more than any other business in the U.S.


This strategy is “designed to obtain default judgments against consumers without giving them any real opportunity to defend themselves,” said Carolyn Carter of the National Consumer Law Center.


USA Discounters will sell to anyone who walks into their stores, but most of their locations are near military bases and they offer credit to any member of the armed forces.

When interviewed about his company’s business and legal practices, USA Discounters’ vice president Timothy Dorsey told ProPublica: “This company is committed to ensuring that the men and women who serve and sacrifice for our country are always treated with the honor and respect they deserve.” Dorsey added that his company provides credit to many military personnel who otherwise wouldn’t qualify for it.


He even claimed the use of Virginia for all lawsuits was for “the customer’s benefit,” since state law allows businesses to avoid using a lawyer to sue, thus saving on legal fees that are supposedly passed on to customers. The company says members of the armed forces may request to be sued in another state.


In addition, Virginia law states that if a defendant doesn’t respond to the notice of suit, they may be represented by an attorney; however, the law allows the plaintiff to suggest an attorney to represent a defendant. One attorney, suggested by USA Discounters, represented defendants in all 11 of the cases ProPublica examined.

-Noel Brinkerhoff, Steve Straehley


To Learn More:

Thank You for Your Service: How One Company Sues Soldiers Worldwide (by Paul Kiel, Washington Post)

Largest Car Title Loan Company Avoids Interest-Rate Limits by Charging “Fees” (by Steve Straehley, AllGov)


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