Rackets that fleece military suffer another blow

Website advertised store that had a Lakewood outlet and was charged with predatory debt-collection practices.
Website advertised store that had a Lakewood outlet and was charged with predatory debt-collection practices.

The state has won a small but satisfying victory in the war against enterprises out to separate young military personnel from their money.

On Friday, state Attorney General Bob Ferguson announced that Freedom Stores, Inc., will pay $63,000 in fines and fees to settle complaints about deceptive ads and coercive collection practices. The allegations revolved around Freedom Home and Electronics, a store the company operated at Lakewood’s Towne Center, whose marketing targeted JBLM troops and others associated with the military.

This particular complaint was part of a much larger picture. Freedom Stores ran stores in many other states, nearly all of which have closed under pressure from attorneys general and the U.S. Consumer Protection Bureau.

The company has already agreed to give $2.5 million worth of redress to its customers. Its business practices were wrapped in unctuous “support the troops” slogans, patriotic imagery and buddy-to-buddy sales pitches. They were all the more ugly for the hokum patriotism.

Freedom Stores offered “guaranteed credit” to service members, neglecting to mention that some of them would have to produce down payments of higher than 50 percent. Another ploy to get people in the store was the old “why pay …?” ruse, in which the price had been “slashed” from a fictitious MSRP that no one had ever paid.

These furniture-and-electronics stores also touted broad “military discounts” that turned out to apply only to a few discontinued or clearance items.

It gets worse.

The CFPB also found that Freedom Stores’ credit subsidiaries coerced military customers by contacting their commanding officers about late payments – a form of intimidation outlawed in another predatory racket, the payday loan industry. Customers in arrears could also find themselves facing lawsuits filed in Virginia, even if they had never been to Virginia.

Friday’s settlement – which mirrors those in other state – forbids Freedom Stores from:

▪ Siphoning payments directly from military paychecks.

▪ Filing a collections lawsuit in any county where the buyer doesn’t live.

▪ Hounding commanding officers.

▪ Employing deceptive ads and promotions.

The Lakewood store closed this summer while this settlement was in the works. The business model doesn’t appear to work without fleecing young military personnel who are naive about finances.

Freedom Stores itself is part of an even bigger picture. There’s a sea of sharks out there hunting for any possible way to wring money out of service members.

Some of the country’s biggest banks have illegally foreclosed on the homes of active-duty personnel. Many payday lenders have specialized in sinking their claws into men and women in uniform, luring them into chain loans that impose outrageous finance charges. Congress and the Defense Department have repeatedly enacted safeguards against such predatory practices; the predators have often found ways to game the safeguards.

Last week’s $63,000 settlement is a pittance in the scheme of things, but it serves notice to would-be sharks that preying on the military is a high-risk venture.