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USA Discounters agrees to forgive $10.2 million in debt for Maryland consumers under AG settlement

Bankrupt retailer USA Discounters has agreed to forgive $95.9 million in consumer debt nationwide, including $10.2 million for about 5,700 Maryland consumers, state Attorney General Brian E. Frosh said Friday.

Frosh and 49 other state attorneys general reached a settlement with the retailer, which also operated as USA Living and Fletcher's Jewelers, after alleging the company engaged in unfair, abusive and false practices.

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USA Discounters denied any wrongdoing, according to the settlement agreement, and said it compiled with all state and federal laws governing its business.

The retailer sold furniture, appliances, televisions, computers, smart phones, jewelry and other goods mostly on credit. It closed its stores in 2015 and later filed for Chapter 11 bankruptcy protection.

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Frosh and 49 other attorneys general allege that USA Discounters sold overpriced household goods at high interest rates using the military allotment system to guarantee payment. The states accused the company of using abusive debt collection tactics, contacting service members' supervisors and causing some to lose security clearances or face demotions.

"This settlement ensures that USA Discounters will comply with Maryland law when collecting debt owed by Marylanders who are members of the armed services and military veterans, and it will provide significant debt forgiveness for our consumers," Frosh said in the announcement.

USA Discounters agreed to write off account balances for consumers with contracts dated June 1, 2012 or earlier and apply credits to account balances on contracts dated after June 1, 2012. The retailer also agreed to write off judgments that were not obtained in a service member's state of residence, correct negative comments on credit reports and credit judgments obtained against service members with 50 percent of the original judgment amount.

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