In the News 03/24/2015

A furniture and electronics retailer based in Virginia will be required to pay more than $2.5 million in restitution and $10,000 in civil penalties for illegal debt collection practices according to the Consumer Financial Protection Bureau.

Freedom Stores, Inc., Freedom Acceptance Corporation and Military Credit Services, LLC has been accused of filing illegal lawsuits, making unauthorized withdraws from consumer accounts and contacting service members’ commanding officers.

Many of the consumers who were in debt with these companies had parents, significant others or third parties that authorized a one-time payment on their behalf. The withdrawals became illegal when the companies kept that payment information in their systems and took funds from those accounts without authorization or notification (sometimes years later).

Between July 2011 and December 213, Freedom Acceptance Corporation and Military Credit Services filed more than 3,500 lawsuits in Norfolk, Virginia against consumers who had not signed their financing contracts in Virginia and did not live there when the suits were filed. Nearly all of the suits filed resulted in default judgment and the companies garnishing the consumers’ wages. Many of the consumers did not even know they had been sued until their bank funds had been depleted.

The company currently has 14 store locations across the country. Freedom Stores has agreed to compensate its customers and forgive more than $2 million in loans. The company is subject to continued monitoring by the CFPB.

To learn more, check out http://www.jdnews.com/news/military/retailer-to-pay-2-5-million-for-illegal-debt-collection-1.454369?page=1.

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