Today, we announce an enforcement action against Colfax Capital Corporation and its subsidiary Culver Capital, LLC for engaging in unlawful lending practices that targeted and financially harmed servicemembers.
Although the name Colfax Capital Corporation might be new to some, this is actually the last gasp of a chameleon-like company with a long and deplorable record of preying on servicemembers.
Formerly known as Rome Finance Co. Inc. and Rome Finance Company, LLC (collectively Rome Finance), this unlicensed lender provided financing that merchants, such as SmartBuy, used when selling products to military members. Rome Finance’s contracts inflated the disclosed prices of the products to hide the true finance charges that the servicemembers would have to pay, typically by military allotment. This trapped servicemembers in contracts that generated millions of dollars for the company and substantial debt for its customers.
Background on the company’s actions
Rome Finance first came to our attention on Veterans Day 2010, when SmartBuy, Rome Finance and other affiliated finance companies operating in New York were sued by NY Attorney General Eric Schneiderman for unlawful practices that targeted soldiers at Fort Drum. A subsequent review of complaints submitted to the Federal Trade Commission’s Consumer Sentinel Network, our consumer complaints, and an investigation by AG Schneiderman’s office revealed that military members were also targeted in California, Tennessee, Colorado, Georgia, North Carolina, Oklahoma, Texas, and even overseas. The NY suit led to approximately $13 million dollars in fines and settlements.
The NY suit was actually not the first time Rome Finance had been called to account for its unlawful practices. Tennessee Attorney General Robert Cooper had brought suit in 2005 against Rome Finance and an affiliated company called Britlee Inc. for unlawful practices that targeted servicemembers near Fort Campbell Army post through their The Military Zone and Laptoyz Computers and Electronics stores. The TN lawsuit also resulted in a multi-million-dollar judgment against Rome Finance and its network of companies.
What it means for impacted consumers
Although Rome Finance was able to continue doing business for some time by filing for bankruptcy, changing its name to Colfax Capital Corp. and Culver Capital, LLC and employing other evasive maneuvers, I am happy to see that we can finally close the book on Rome Finance in all its forms, and see that they never receive another penny from servicemembers.
Since the company is being liquidated in bankruptcy, Colfax does not have enough money or assets to pay back consumers affected by its actions. Instead, consumers will no longer have to pay on the more than 17,000 outstanding finance agreements, amounting to a total of about $92 million in debt relief for consumers. If you have outstanding finance agreements with Colfax should stop making payments immediately and turn off any allotments that were set up to make these payments. The Bankruptcy Trustee will also notify the credit reporting bureaus that consumers’ contracts with the company should be treated as “paid as agreed,” which could potentially help consumers’ credit scores. Also, if you had default judgments against you, you can apply for the judgments to be vacated. If you have questions about how to do this, check with your JAG or the Attorney General’s office in your state.
Defend yourself from deceptive practices
The sad truth is that Rome Finance was not the first and will not be the last company to financially prey on the military community. Servicemembers, veterans and military families need to actively guard themselves against bad business practices and financial scams.
Make sure you know the total price of the product you’re buying, including interest and fees for your loan, not just the monthly payment! Use available resources like your installation Personal Financial Manager, JAG or legal aid office, your state’s Attorney General office, the Better Business Bureau, and even the internet to research the contract terms and company. Demand to take a copy of the sales contract to a financial or legal professional for review before you enter into it. And if the company will only take payments by military allotment, ask why. That could be a red flag.
Federal and state officials worked in this case to protect you, but remember that you are your own most important first line of defense when it comes to consumer financial decisions!