Companies allegedly targeted vets with illegal debt collection practices

By Mark Payne | Dec 19, 2014

North Carolina Attorney General Roy Cooper   North Carolina Attorney General's Office

North Carolina Attorney General Roy Cooper joined Virginia's attorney general and the Consumer Financial Protection Bureau on Thursday in seeking financial relief from several companies that allegedly used illegal practices to collect debts from U.S. military personnel.

A consent order filed in federal court seeks more than $2.5 million of consumer relief from Freedom Stores Inc., Freedom Acceptance Corp., and Military Credit Services LLC, which are owned by John Melley and Leonard Melley Jr. 

“Military service members work hard to protect our country, but unfortunately their steady paychecks can make them targets for shady practices,”  Cooper said. “We won’t tolerate unscrupulous businesses that take advantage of military consumers.”

Freedom Stores is a furniture and electronics retailer with stores near military bases nationwide. After offering credit to military members, the business transfers the loans to Freedom Acceptance. Military Credit Services also provides loans to military members through more than 300 independent retailers.

Among the allegations against the businesses and their owners are claims that they contacted commanding officers of military members who did not pay their loans, debited the bank accounts and credit cards of friends and family members, and double-dipped into consumers' bank accounts for loan payments, “Our nation’s service members deserve better than to be targeted with illegal collections tactics when they are struggling to pay their bills,” CFPB Director Richard Cordray said. “Freedom Stores and its affiliated companies were filing thousands of lawsuits in Virginia against consumers not from there, taking money from some consumers’ bank accounts without permission, and using the military chain of command to pressure and humiliate service members. Today’s action sends a clear message that the Consumer Bureau will continue to aggressively defend the rights of service members and all consumers.”

In addition to the consumer relief request, the consent order asks for a $100,000 civil penalty.

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