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CFPB Shuts Down USA Discounters’ Servicemember Fee Scam

Company Ordered to Refund $350,000 to Servicemembers Tricked into Paying Fees for Benefits Available for Free

WASHINGTON, D.C.— The Consumer Financial Protection Bureau (CFPB) today put an end to a servicemember fee scam run by USA Discounters, Ltd., a company that operates a chain of retail stores near military bases and offers financing for purchases. USA Discounters tricked thousands of servicemembers into paying fees for legal protections servicemembers already had and for certain services that the company failed to provide. The CFPB has obtained more than $350,000 in refunds for servicemembers harmed by this scam, and USA Discounters will pay an additional $50,000 civil penalty.

“Today we shut down USA Discounters’ fee scam that was designed to exploit unsuspecting servicemembers,” said CFPB Director Richard Cordray. “USA Discounters charged servicemembers for legal protections they were already entitled to, and for services that were never actually provided. Targeting servicemembers with scams disguised as legal benefits is unconscionable, and we will not allow this injustice to continue.”

USA Discounters, Ltd. is a privately held company based in Norfolk, Virginia that operates a chain of retail stores across the country and sells furniture, electronics, bedding, and appliances. Most of the company’s stores are located within a few miles of military bases, and USA Discounters uses standardized contracts tailored to members of the U.S. Armed Forces when dealing with active duty servicemembers.

The Servicemembers Civil Relief Act (SCRA) provides certain legal protections to active duty servicemembers. Among other rights granted by the SCRA, a court may delay debt collection lawsuits filed against a servicemember if the court finds that the servicemember’s military duty requirements hinder his or her ability to defend himself or herself. Similarly, a court may delay a creditor’s attempts to collect on a judgment after it has been entered against a servicemember if the servicemember’s military service hampers his or her ability to comply with the judgment.

Active duty servicemembers had to agree in a contract with USA Discounters to pay a $5 fee for a company called SCRA Specialists LLC to be their representative with respect to their rights under the SCRA. USA Discounters portrayed SCRA Specialists as an independent representative that would be available to receive notices of lawsuits filed by USA Discounters, inform USA Discounters of a change in the servicemembers’ address, and verify servicemembers’ military status to determine whether the servicemember was eligible for protection under the SCRA. These services were characterized as a benefit to servicemembers, but they only helped USA Discounters sue servicemembers. In addition, many of the services were never actually performed. USA Discounters also misrepresented SCRA Specialists as an independent company working on servicemembers’ behalf, when in fact SCRA Specialists’ sole source of revenue was USA Discounters’ customers.

USA Discounters gave $4.50 of each $5 fee to SCRA Specialists. The fee was charged in more than 70,000 contracts and generated more than $350,000 since 2009.

The CFPB found that USA Discounters harmed servicemembers with unfair and deceptive acts and practices, including:

  • Deceptively marketing its own legal obligation as a service to servicemembers: USA Discounters told servicemembers that they would use SCRA Specialists to verify the servicemember’s active military status for them so that the servicemember could receive certain protections. This verification was marketed as a benefit, when in fact, USA Discounters had to report on the servicemember’s military status in order to obtain a default judgment against the servicemember.
  • Misleading servicemembers into believing they would have an independent representative: USA Discounters required servicemembers to pay the $5 fee in exchange for SCRA Specialists’ allegedly independent representation of them. However, SCRA Specialists’ sole source of revenue was USA Discounters’ customers, and the disclosed services would have helped USA Discounters to advance its own interests against the servicemembers.
  • Failing to provide actual services to struggling borrowers: In its contracts, USA Discounters pledged that servicemembers would receive benefits in exchange for the $5 fee, but many of the services promised were never actually performed.

Enforcement Action

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions or individuals engaging in unfair, deceptive, or abusive acts or practices. The CFPB’s consent order requires USA Discounters to:

  • End unfair and deceptive practices: USA Discounters can no longer market these contracts as a benefit to servicemembers and cannot pretend that SCRA Specialists is an independent company.
  • Stop charging SCRA-related fees: USA Discounters may not charge a fee for any SCRA-related service involving credit it extends.
  • Provide over $350,000 in restitution to servicemembers: USA Discounters is required to make full restitution to all eligible consumers for the $5 SCRA Specialists fee, plus interest. For consumers who repaid their installment accounts, USA Discounters will mail a check for the full $5 plus interest. For those consumers whose account is in collection, their debt will be discharged the $5 fee plus interest.
  • Pay a $50,000 penalty: USA Discounters will pay a $50,000 penalty to the CFPB’s Civil Penalty Fund.

The full text of the CFPB’s Consent Order is available at:

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit