Jason S. Miyares
Attorney General of Virginia

Image of the Virginia AG Seal

Commonwealth of Virginia
Office of the Attorney General

Mark Herring
Attorney General

202 North Ninth Street
Richmond, Virginia 23219


~ Virginia consumers to receive $10.5 million as part of settlement to resolve allegations that retailer used deceptive advertising and abusive debt collection practices in connection with goods sold primarily to military families and veterans ~

RICHMOND (September 30, 2016) - Attorney General Mark R. Herring today announced that Virginia has successfully led the negotiation of a settlement between 49 states plus the District of Columbia and retailer USA Discounters to resolve the states' claims of deceptive trade practices by the company against its customer base of largely military families and veterans. The settlement will result in nearly $100 million of forgiven debt and restitution nationwide, including more than $10.5 million to more than 8,000 Virginia customers. This is the largest multistate consumer settlement ever led by Virginia, and follows a joint action in 2014 by the Commonwealth, North Carolina, and the Consumer Financial Protection Bureau to protect consumers from similar abusive practices by Freedom Furniture.


"I'm proud that Virginia was able to take a leadership role in resolving these really serious allegations of abusive and illegal business practices aimed directly at veterans and servicemembers in Virginia and around the country," said Attorney General Herring. "It's just shameful that a company would base its business model on deceptive and abusive practices directed toward servicemembers and veterans. I'm not going to stand by while our military men and women and Virginia's court system are abused. We're sending a clear signal that we will aggressively pursue businesses that abuse Virginia consumers, especially any that prey on veterans and servicemembers."


USA Discounters, also doing business as USA Living and Fletcher's Jewelers, sold consumer products, including furniture, appliances, televisions, computers, smart phones, jewelry and other consumer goods and financed many of the sales on credit. USA Discounters typically marketed to members of the military and veterans, advertising that military, veterans and government employees would never be denied credit for goods purchased from the retailer. Locations generally coincided with the location of military bases and the associated population of military families. Virginia locations included Colonial Heights, Hopewell, Newport News, Norfolk, Virginia Beach, and Woodbridge. 


Attorney General Herring and his colleagues alleged that USA Discounters broke the law by engaging in unfair, abusive, false and deceptive acts and practices in its advertising, during the loan origination process, and during the collection process. These alleged practices included abuse of the military allotment system to pay for overpriced goods with high interest rates and inappropriate contact with service members' chain of command which may have caused some service members to lose security clearances and face demotions.


The states also alleged that USA Discounters abused their customers and Virginia courts by filing collections lawsuits against service members in Virginia jurisdictions regardless of the service member's location, deployment status, or residence, leading to default judgments being entered because the service member couldn't travel to Virginia or may not have even known they had been sued.


To resolve the states' allegations, USA Discounters has agreed to wipe out a significant amount of outstanding consumer debt, provide restitution credits, and correct consumers's credit reports. The total estimated value to consumers for these restitution measures is approximately $95.9 million, primarily benefiting active and veteran service members.  Namely, USA Discounters agreed to:

  • Wipe out all remaining debt for customers who purchased goods on or before June 1, 2012 and correct the negative comment from the company on those consumers' credit reports (Approximately $71 million nationally, $9.39 million for Virginians);
  • Apply a $100 credit to all customers who purchased goods after June 1, 2012, which were not discharged in bankruptcy, and correct the negative comment from the company on those consumers' credit reports (Approximately $2.89 million, $443,000 for Virginians);
  • Wipe out all judgments that were not obtained in the correct state, and correct the negative comment from the company on those consumers' credit reports (Approximately $21.2 million, approximately $366,000 for Virginians);
  • Provide a 50% credit to all members of the military that had a judgment entered against them in the correct state (Approximately $728,000, $322,000 for Virginians);
  • Incur a penalty claim of $40 million to the benefit of the states.   This $40 million penalty is expected to keep USA Discounters from ever reopening and engaging in these tactics and practices.  


"This is the biggest multistate consumer settlement successfully led by the Commonwealth of Virginia," said Attorney General Herring. "We have secured significant relief for folks who still owe money and those who were taken to court by USA discounters. We have also arranged for repairs to be made to the credit reports of those who were harmed in Virginia and around the country. A significant amount of this compensation and relief will go directly to Virginia veterans and military families that were harmed by USA Discounter's marketing and collections practices."


USA Discounters closed its stores in the summer of 2015 before later declaring bankruptcy. The settlement has been filed and approved by the United States Bankruptcy Court for the District of Delaware as part of USA Discounters' bankruptcy proceedings. All states and the District of Columbia participated in the settlement, except Colorado which previously settled similar claims, and the matter was led by an executive committee including Virginia, Georgia, New York, Nevada, North Carolina, Tennessee, Texas, Washington, and the District of Columbia. Settlement negotiations and a mediation that occurred on June 1 to 3, 2016 were led by Virginia, Nevada, and Tennessee. The Settlement Agreement will become effective on October 14, 2016 after the period for appeal has expired.


The Commonwealth is represented in this matter by Assistant Attorney General Stephen Sovinsky and Senior Assistant Attorney General Dave Irvin. For information on the settlement, please contact Attorney General Herring's Consumer Protection Section by phone at 1(800) 552-9963.


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