News Column

Schuette: Coalition of States Strike Down Abusive Military Consumer Lender

July 29, 2014

LANSING, Mich., July 29 -- The Michigan Attorney General issued the following news release:

Michigan Attorney General Bill Schuette today announced that a partnership of the federal Consumer Financial Protection Bureau and 12 states had reached a global settlement with a military consumer lender known as Rome Finance Company, based in California and Georgia.

"Our men and women in uniform laid their lives on the line for our freedom. Instead of helping them, this company exploited our heroes," said Schuette. "Today's settlement forgives debts for service members who were victimized by Rome Finance, and ensures the company never does business again."

Rome Finance, which also did business as Colfax Capital Corporation and Culver Capital, LLC, financed consumer debts exclusively to service members, typically for computers, gaming systems, and other goods and services from retailers online or at malls near military bases. Payments were extracted from the military member's paycheck and were secured by access to a bank account.

The multi-state lawsuit filed by Michigan and eleven states alleged multiple illegalities by the company, including:

* Failing to accurately disclose finance charges and interest rates;

* Knowingly or recklessly assisting in the practice of financing contracts with inflated prices of goods sold;

* Violation of the Military Lending Act for excessive interest, onerous provisions, and for requiring allotment payment backed by access to a bank account;

* Violations of State and CFPB's unfair, deceptive, or abusive acts and practices prohibitions by financing consumer loans and/or collecting on consumer loans; and,

* Failing to provide required periodic disclosures.

The settlement liquidates Rome Finance and its successor corporations, provides more than $91 million in debt relief to approximately 23,000 affected United States servicemembers worldwide, marks all outstanding debt "paid in full" with consumer finance reporting agencies, and bans new business by the company and its principals.

Approximately 200 Michigan service members will be notified that their outstanding debts to the company will be forgiven. Service members will keep all merchandise purchased, but debts associated with the products will be erased.

The federal Consumer Financial Protection Bureau participated in this national effort in addition to the Attorneys General of Colorado, Delaware, Florida, Georgia (participating through the Georgia Governor's Office), Kentucky, Indiana, Iowa, Massachusetts, Michigan, New York, North Carolina, Tennessee and Vermont.

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Source: Targeted News Service

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