WATERTOWN, N.Y. — New York is among several states that have reached a settlement with a military-consumer lender that provides nearly $92 million in debt relief to nearly 18,000 affected U.S. service members worldwide.
The office of New York Attorney General Eric Schneiderman made the announcement in a news release distributed Wednesday.
Schneiderman led a partnership involving the federal Consumer Financial Protection Bureau (CFPB) and 12 other states in settling with Rome Finance Company, which is based in California and Georgia.
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More than 550 New York service members, with a combined total of over $2.2 million in Rome Consumer debt, will benefit from this settlement and ancillary resolutions, Schneiderman’s office said in the news release.
Deanna Nelson, assistant attorney general in charge in the Watertown regional office, is handling the matter.
Besides the $92 million in debt relief, the settlement also liquidates Rome Finance and its successor corporations, marks all outstanding debt “paid in full” with consumer finance-reporting agencies, and bans the company and its principals from conducting new business.
The settlement allows the service members to keep all merchandise they purchased, erases all the associated debts, and it vacates the judgments on request, including about 5,400 judgments located to date, Schneiderman’s office said.
Rome Finance, which did business most recently as Colfax Capital Corporation and Culver Capital, LLC, financed consumer debts exclusively to service members, typically for computers, gaming systems, and other goods and services from retailers online or at malls near military bases.
The firm extracted payments from the military member’s paycheck and secured the payments through access to a bank account, the office said.
New York’s top law enforcer and the other representatives alleged multiple “illegalities.”
They included failure to accurately disclose finance charges and interest rates; “knowingly or recklessly” assisting in the practice of financing contracts with inflated prices of goods sold; and failure to provide required periodic disclosures;
They also included financing consumer loans and/or collecting on consumer loans, which is deemed as violating state and CFPB’s “unfair, deceptive, or abusive acts,” Schneiderman’s office said.
The illegalities also included a violation of the Military Lending Act for “excessive interest, onerous provisions, and for requiring allotment payment backed by access to a bank account,” the office added.
“By holding Rome Finance accountable for these egregious acts, we are sending the message that those who prey upon our nation’s heroes will be held accountable,” Schneiderman said in the news release.
Besides Schneiderman and the CFPB, the state attorneys general of Colorado, Delaware, Florida, Georgia (participating through the Georgia governor’s office), Kentucky, Indiana, Iowa, Massachusetts, Michigan, North Carolina, Tennessee, and Vermont participated in this effort.
Contact Reinhardt at ereinhardt@cnybj.com
