Va. senators join call for inquiry into company’s debt-collection practices
Virginia’s two senators are among five lawmakers urging a federal investigation into allegations that “aggressive debt collection actions” are being used by USA Discounters and similar retailers against active-duty service members.
In a letter sent Tuesday to the Consumer Financial Protection Bureau and the secretary of defense , Sens. Mark Warner and Tim Kaine, both Democrats, joined Jeanne Shaheen, D-N.H., Richard Blumenthal, D-Conn., and Jack Reed, D-R.I., in calling for an inquiry into the company’s debt collection practices.
They cited a ProPublica investigation of USA Discounters, which is based in Virginia Beach. The story detailed how the company guarantees service members credit on high-priced appliances and electronics, then sues them in local courts if they fall behind on their payments, regardless of where they made their purchases.
If the service members do not show up in court, the company obtains a judgment and can garnish their wages. Department of Defense payroll data show USA Discounters seizes the wages of more service members than any other company in the country by a substantial margin.
In response to the article, a version of which was published in The Virginian-Pilot on July 26, a company vice president said the story “inaccurately portrayed” its policies and practices in dealing with military customers.
In a letter to the editor published July 30, Timothy Dorsey wrote that the company could not comment on individual cases involving default, and that details of certain customers’ accounts “would have told a very different story than the one reported.”
“USA Discounters is proud of our relationship with the military community,” Dorsey wrote.
The company has locations across the nation but uses a clause in its contracts with service members to file lawsuits in Virginia courts.
USA Discounters and two other military-focused retailers, all headquartered in Hampton Roads, have filed more than 35,000 lawsuits since 2006 in two local courts.
Active-duty service members are supposed to be protected from potentially unfair lawsuits by the federal Servicemembers Civil Relief Act, but the act has a loophole. It doesn’t address where plaintiffs can sue, allowing USA Discounters to sue out-of-state borrowers in Virginia.
In their letter, the senators urged Secretary of Defense Chuck Hagel and Richard Cordray, director of the Consumer Financial Protection Bureau, to “fully investigate these claims and educate our servicemembers about their rights and the debt collection practices used by these retailers.”
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