After a ProPublica investigation of USA Discounters’ lending practices last summer, a barrage of lawsuits, regulatory inquiries and changes to Defense Department policies followed.
For the first time in its history, USA Discounters is living up to its name. For years, the company has specialized in selling marked-up appliances, electronics and furniture to service members through high-priced loans. But these days, it’s just the place for a soldier to go for a steal on a bedroom set or a washer. The company’s website used to shout “Bad Credit? Slow Credit? No Credit? No Problem!” Now it’s “ENTIRE STORE ON SALE!”
The chain, which once had 24 stores, almost all right outside military bases around the country, has been holding a rolling going out of business sale. The closures follow our investigation of the company’s lending practices last summer and a subsequent series of government inquiries and Department of Defense actions.
USA Discounters did not respond to our calls and emails seeking comment. Just seven of the company’s two dozen stores remain open – and those are furiously selling off merchandise at discounts of “70%–95% OFF,” according to the company’s website.
ProPublica’s investigation, which also ran in the Washington Post, detailed how the company guaranteed credit to service members for items that sometimes sold for two to three times the typical retail price. If borrowers fell far behind on their loans, USA Discounters sued them in Virginia state court, regardless of where the purchases were made. Between 2006 and last July, USA Discounters had filed more than 13,000 suits in Virginia courts —almost always winning— and seized the pay of more active-duty military than any company in the country.
Another retailer featured in the story, Freedom Furniture and Electronics, is also closing.
Following our story last year, a group of senators sent letters to federal regulators urging them to investigate USA Discounters and toughen up laws and regulations to address the lending and collection issues highlighted in the article. A spokesman for the Consumer Financial Protection Bureau (CFPB) said the agency does not comment on investigations.
The company initially reacted by issuing a press release calling ProPublica’s reporting inaccurate, though it identified no errors. Later, USA Discounters announced it was changing the name of its stores to “USA Living” and reforming its collection practices. It would still sue service members in a court that might be hundreds of miles from where they are based, but customers would be clearly notified of the impending action and given the option to be sued closer to home. It was a change a consumer advocate described as “a little less bad” than before.