WATERTOWN, N.Y. (Legal Newsline) - New York Attorney General Eric Schneiderman announced a $9.5 million settlement on Monday with a North Carolina retailer and financing firm that allegedly made fraudulent charges to the accounts of thousands of soldiers.
Under the terms of the settlement with SmartBuy, the debt will be wiped out for hundreds of New York soldiers who purchased electronics at a mall near Fort Drum. Thousands of soldiers around the country will also reap the benefits of the settlement.
The settling parties in the litigation include GJS Management Inc., Britlee Inc., Integrity Financial of North Carolina Inc., and Frisco Marketing of N.Y. LLC, doing business as SmartBuy and SmartBuy Computer, as well as Rebecca Wirt, Stuart Jordan and John Paul Jordan.
The agreement represents the second settlement Schneiderman's office reached with SmartBuy and its affiliated companies, removing a total of $12.9 million in debt for service members.
"SmartBuy took advantage of service members using deceptive practices, roping them into high interest contracts and ruining their credit," Schneiderman said. "These actions are nothing short of unconscionable. I am proud that we were able to wipe out the debts of thousands of men and women who stand up for us every day. While protecting our values overseas, this is the last thing these soldiers needed to be worried about at home."
Sales clerks at SmartBuy kiosks allegedly pushed the sales of electronic equipment to soldiers and refused to take cash payments for merchandise. Sales representatives then pressured the service members to enter into payment contracts with hidden fees and high interest rates, Schneiderman claims.
SmartBuy purchased merchandise from stores like Costco, Walmart and Sam's Club, marked the items up 200 to 325 percent and added an interest rate of 10 to 25 percent. Interests rates averaged out to 244 percent.
Under the terms of the settlement, the settling companies will release all of the approximately 358 New York state soldiers and an additional 3,963 soldiers around the nation from their debt, clear all negative credit reports related to the contracts, pay $150,000 in penalties to the state and cease doing business in the state of New York.
The total value of the second resolution is $9,562,234.10.
Litigation related to the matter continues in Jefferson County Supreme Court against Rome Finance LLC, Ron Wilson and William Collins.