News Column

State attorney general's office, 12 other states ban national military lending company

July 30, 2014

By Craig Fox, Watertown Daily Times, N.Y.



July 30--WATERTOWN -- The state attorney general announced Tuesday that Fort Drum soldiers were among 550 military members across the state who did business with a national lending company and will have a total of $2.2 million in debts owed to the company wiped out.

Attorney General Eric T. Schneiderman, leading a partnership of the federal Consumer Financial Protection Bureau and 12 other states, said a military consumer lender -- commonly known as Rome Finance Co., based in California and Georgia -- 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.

The company did business most recently as Colfax Capital Corp. and Culver Capital LLC.

Payments were extracted from the military member's paycheck and were secured by access to a bank account, according to a news release.

"The brave men and women of our military, who are already sacrificing so much, shouldn't also have to worry about being exploited by predatory and abusive lenders," Mr. Schneiderman said in the release. "By holding Rome Finance accountable for these egregious acts, we are sending the message that those who prey upon our nation's heroes will be held accountable."

Mr. Schneiderman said military members will keep all merchandise purchased, but debts associated have been erased and judgments will be vacated on request, including approximately 5,400 judgments located to date. More than 550 military members in New York state will benefit directly from this settlement.

In 2012, the attorney general's office handled a similar settlement with a military lending company with ties to Rome Finance. The office permanently banned a related retailer, SmartBuy, from peddling consumer goods and contracts to Fort Drum soldiers through a location at the Salmon River Mall. Earlier settlements in related litigation yielded $12.9 million in debt relief nationwide, bringing the combined amount of erased debt to well over $100 million as a result of that effort.

The global settlement liquidates Rome Finance and its successor corporations, provides nearly $92 million in debt relief to more than 17,800 U.S. military members worldwide, marks all outstanding debt "paid in full" with consumer finance reporting agencies, and bans new business by the company and its principals.

The attorney general's office and the other governmental representatives alleged multiple illegalities, 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 and failing to provide required periodic disclosures.

It accuses the company of using unfair, deceptive or abusive acts and practices by financing and collecting on consumer loans and violating the Military Lending Act for excessive interest and onerous provisions and for requiring allotment payment backed by access to a bank account.

Fort Drum Garrison Commander Col. Gary A. Rosenberg expressed his gratitude to the attorney general's office for its dedication in seeking justice for the Fort Drum service members who fell victim to the company. "Ninety-two million dollars' worth of debt relief for nearly 18,000 service members is an amazing victory and is a perfect example of how a small group of dedicated individuals have the capacity for enormous, positive change in our world," he said.

Participating in this national effort with the attorney general office were the federal Consumer Financial Protection Bureau and the attorneys general of Colorado, Delaware, Florida, Georgia, Kentucky, Indiana, Iowa, Massachusetts, Michigan, North Carolina, Tennessee and Vermont.

The case was handled by Deanna R. Nelson, assistant attorney in charge of the attorney general's Watertown office, with the help of the office's Consumer Protection Bureau. The New York investigation was conducted by Chad Shelmidine, an investigator in the Watertown regional office.

As assistant attorney general, Ms. Nelson has become an advocate protecting soldiers from predatory business practices. In November, she went to Washington, D.C., to appear at a hearing before the Senate Commerce, Science & Transportation Committee to testify that soldiers and other military personnel can be more vulnerable than other consumer groups.

She and other local officials also worked with representatives from the Financial Readiness program at Fort Drum over the last few years, identifying military members with Rome Finance contracts. Rome Finance was involved in the bulk of the lending for SmartBuy, the retail partner in the Salmon Run Mall.

In a statement, Secretary of Defense Charles Hagel said he was grateful for the Consumer Financial Protection Bureau's efforts in targeting predatory lending schemes used against military personnel.

"No one who serves our country in uniform -- especially during a time of war -- should ever fall victim to predatory financial practices, and today's announcement is an important step in righting this wrong," Mr. Hagel said.

___

(c)2014 Watertown Daily Times (Watertown, N.Y.)

Visit Watertown Daily Times (Watertown, N.Y.) at www.watertowndailytimes.com

Distributed by MCT Information Services


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Source: Watertown Daily Times (NY)


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