TACOMA, Wash. (CN) - A chain store with a debt collection arm paid $38,000 for targeting military members with deceptive ads and illegal collections, Washington's attorney general said.
Freedom Stores dba Freedom Furniture and Electronics, Military Credit Services and Freedom Acceptance Corp. did not admit to wrongdoing in the Oct. 21 consent decree in King County Court. It has paid the $38,000 cost of investigation and its $25,000 fine will be suspended if it abides by terms of the consent decree.
Its only Washington store, near Joint [Army-Air Force] Base Lewis-McChord, 9 miles from Tacoma, closed in August.
The attorney general said its illegal debt collection practices including contacting soldiers' commanders, filing collection actions in Virginia, regardless of where the debtor lived, and seeking automatic withholding of military pay, which the Pentagon prohibits for consumer goods.
Freedom Stores sold furniture, electronics, jewelry and other goods it advertised at allegedly "robust military discounts and other special pricing that in reality were narrowly applied, nonexistent, and/or provided little benefit to the military community," according to the settled complaint
It promised "guaranteed credit" to servicemembers, without disclosing that it often required a down payment of more than 50 percent.
Freedom Stores settled unfair debt collection claims with the Consumer Financial Protection Bureau in December by paying $2.5 million in consumer redress and a $100,000 civil penalty.
Freedom Stores said in a statement after the December settlement that it was "redoubling our efforts to educate customers on money management fundamentals."
"We have also put new safeguards in place to ensure customers are charged for loan payments only as expected and will be creating a blue ribbon internal advisory board of former military personnel and other experts who will help guide our policies," the statement said.
The retailer also has branches in Norfolk, Va.; Colorado Springs, Colo.; and El Paso and Killeen, Texas, according to its Internet page, checked Monday morning. All are near military bases.
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