WASHINGTON (12/23/14)--Three companies have been accused of using illegal debt collection practices against American servicemembers and are the subject of an enforcement action from the Consumer Financial Protection Bureau (CFPB).
Freedom Stores Inc., Freedom Acceptance Corp. and Military Credit Services LLC and their chief officers are the subject of a consent order that would require them to provide more than $2.5 million in consumer relief and to pay a $100,000 penalty.
"Freedom Stores and its affiliated companies were filing thousands of lawsuits in Virginia against consumers not from there, taking money from some consumers' bank accounts without permission, and using the military chain of command to pressure and humiliate servicemembers," said CFPB Director Richard Cordray in a statement announcing the action.
Freedom Stores, also known as Freedom Furniture and Electronics, is a Virginia-based retailer that sells furniture and electronics. According to the CFPB, Freedom Stores offers credit to consumers purchasing its merchandise and transfers the contract to the affiliated Freedom Acceptance Corp.
The owners of those companies, John Melley and Leonard Melley Jr., also own Military Credit Services, a financing company that primarily caters to servicemembers.
A CFPB investigation found the following illegal practices:
The attorneys general of North Carolina and Virginia helped the CFPB bring the action against the companies.