Wednesday, November 14, 2012
New York Attorney General Eric T. Schneiderman's office announced it has reached a $9.5 million settlement with SmartBuy, a retailer and financing firm based in North Carolina, after the company fraudulently charged thousands of soldiers who purchased electronics near Fort Drum and adversely impacted their credit.
The settlement will clear debt fraudulently charged to hundreds of New York soldiers at a shopping mall near Fort Drum and thousands of soldiers nationwide. It is the second settlement the Attorney General's office has reached with SmartBuy and its affiliated companies, erasing $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. These actions are nothing short of unconscionable," Schneiderman said. "While protecting our values overseas, this is the last thing these soldiers needed to be worried about at home."
According to the terms of today’s settlement, the settling companies will contractually release all of the approximately 358 New York State soldiers, and an additional 3,963 soldiers nationwide from their debt.
The defendants also will clear all negative credit reports related to the contracts and will pay a $150,000 penalty to the state. The total value of this second resolution is $9,562,234. The litigation is the result of the Attorney General's office investigation of a kiosk and small storefront at the Salmon Run Mall that appeared to be marketing specifically to Fort Drum soldiers. Sales clerks aggressively pushed the sales of electronic equipment, including laptops, gaming systems and flat screen televisions to soldiers.
At the time of the sales, SmartBuy sales representatives refused to take cash payments for merchandise and instead pressured soldiers to enter into payment contracts with hidden fees and exorbitant interest rates.
The investigation revealed that the practices at SmartBuy's Salmon Run Mall location were part of a larger scheme to defraud service members by deceptively reselling them computers and electronics at inflated prices and locking the soldiers into revolving credit agreements with undisclosed fees and high interest rates paid directly from military paychecks to unlicensed lenders.
SmartBuy purchased merchandise from stores such as Sam's Club, Costco and Walmart. The items were then marked up by 200-325 percent, and included an added interest of 10-25 percent. The interest rates averaged out at 244 percent.
SmartBuy closed its New York operations after the Attorney General's office demanded it cease its deceptive business practices and reimburse defrauded soldiers. The settling entities include Frisco Marketing of N.Y. LLC, doing business as SmartBuy and SmartBuy Computers and Electronics; Integrity Financial of North Carolina Inc.; Britlee Inc.; and GJS Management Inc.; all owned and/or operated by Fayetteville, N.C.-based family John Paul Jordan, Stuart Jordan and Rebecca Wirt.
New York Attorney General Eric T. Schneiderman's office announced it has reached a $9.5 million settlement with SmartBuy, a retailer and financing firm based in North Carolina, after the company fraudulently charged thousands of soldiers who purchased electronics near Fort Drum and adversely impacted their credit.
The settlement will clear debt fraudulently charged to hundreds of New York soldiers at a shopping mall near Fort Drum and thousands of soldiers nationwide. It is the second settlement the Attorney General's office has reached with SmartBuy and its affiliated companies, erasing $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. These actions are nothing short of unconscionable," Schneiderman said. "While protecting our values overseas, this is the last thing these soldiers needed to be worried about at home."
According to the terms of today’s settlement, the settling companies will contractually release all of the approximately 358 New York State soldiers, and an additional 3,963 soldiers nationwide from their debt.
The defendants also will clear all negative credit reports related to the contracts and will pay a $150,000 penalty to the state. The total value of this second resolution is $9,562,234. The litigation is the result of the Attorney General's office investigation of a kiosk and small storefront at the Salmon Run Mall that appeared to be marketing specifically to Fort Drum soldiers. Sales clerks aggressively pushed the sales of electronic equipment, including laptops, gaming systems and flat screen televisions to soldiers.
At the time of the sales, SmartBuy sales representatives refused to take cash payments for merchandise and instead pressured soldiers to enter into payment contracts with hidden fees and exorbitant interest rates.
The investigation revealed that the practices at SmartBuy's Salmon Run Mall location were part of a larger scheme to defraud service members by deceptively reselling them computers and electronics at inflated prices and locking the soldiers into revolving credit agreements with undisclosed fees and high interest rates paid directly from military paychecks to unlicensed lenders.
SmartBuy purchased merchandise from stores such as Sam's Club, Costco and Walmart. The items were then marked up by 200-325 percent, and included an added interest of 10-25 percent. The interest rates averaged out at 244 percent.
SmartBuy closed its New York operations after the Attorney General's office demanded it cease its deceptive business practices and reimburse defrauded soldiers. The settling entities include Frisco Marketing of N.Y. LLC, doing business as SmartBuy and SmartBuy Computers and Electronics; Integrity Financial of North Carolina Inc.; Britlee Inc.; and GJS Management Inc.; all owned and/or operated by Fayetteville, N.C.-based family John Paul Jordan, Stuart Jordan and Rebecca Wirt.