New York Attorney General Eric T. Schneiderman said on Monday that his office has secured a $9.5 million settlement with SmartBuy, a North Carolina-based retailer and financing firm.
Through a kiosk at Salmon Run Mall in Watertown, N.Y., SmartBuy preyed on Army soldiers stationed at nearby Fort Drum, overcharging them for electronics and forcing them into high-interest installment terms, the Attorney General’s office charged.
This is the second settlement Schneiderman has reached with SmartBuy and its affiliated companies, wiping out 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. 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," Schneiderman said. "While protecting our values overseas, this is the last thing these soldiers needed to be worried about at home."
The New York state investigation revealed that SmartBuy's Salmon Run Mall practices 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 very high interest rates paid directly from military paychecks to unlicensed lenders.
SmartBuy purchased merchandise from stores like Sam's Club, Costco and Walmart. The items were then marked up by 200% to 325%, and included an added interest of 10% to 25%. The interest rates averaged out at 244%.
According to the terms of Monday’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 will also clear all negative credit reports related to the contracts and will pay a $150,000 penalty to the state. The total value of the second resolution is $9,562,234.10.
Under the consent order and judgment signed by State Supreme Court Justice Hugh Gilbert in Jefferson County, the settling companies also are banned from doing business in New York.