First, they appear to set up near military bases and charge exorbitant financing fees to young soldiers, under a veneer of being super patriotic or something.
The final tally on the loans can be staggering for some young service members. In 2009, Army Pvt. Jeramie Mays, then 26, walked into the USA Discounters near Fort Bliss in Texas to buy a laptop before being deployed to Iraq. He chose a model that typically retailed for $650. At USA Discounters, it sold for $1,799. On top of that came $458 in add-ons. After another $561 in interest charges, Mays walked out owing $2,993 in payments over 23 months, according to a copy of his contract.
Next, they take advantage of a part of Virginia law that allows corporations to file lawsuits themselves, which circumvents part of the Fair Debt Collection Practices Act that normally keeps a retailer from suing someone outside of the state in which they live:
On every active-duty service member's contract ProPublica examined, just below various disclosures, it says the buyer "is subject to the jurisdiction of the state courts of the COMMONWEALTH OF VIRGINIA." To receive financing, customers must agree.
Such a demand is "abusive" and is not typically found in contracts involving consumers, said Carter of the National Consumer Law Center. The Federal Debt Collection Practices Act prohibits such suits if they are filed by a third party, such as a law firm. Because USA Discounters uses a company employee to file its debt collection suits, the law doesn't apply.
http://www.propublica.org/article/thank-you-for-your-service-how-one-company-sues-soldiers-worldwide
I'm not clearly seeing what part of the Service Members Civil Relief Act is being abused, but the basic idea there is that active service people can delay a court action against them by request. That's tougher when the court in question is far away, even though this company apparently hires a lawyer (the same guy almost every time) to send the defendants a letter simply telling them they can request one.
So, they get soldiers and sailors to finance a lot of goods at terrible terms with a lure of some kind of happy Go America marketing, then aggressively sue and garnish their wages when then almost inevitably fail to pay, while taking advantage of of loopholes in at least two different laws designed to protect people from this precise kind of predatory lending.
Nice.
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