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Paul Kiel: USA Discounters Responds to ProPublica

July 30, 2014

The company says ProPublica 'inaccurately' portrayed its policies regarding military customers, but cites no errors.

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Photo from Flickr user Mike Kalasnik

By Paul Kiel
By arrangement with ProPublica

In a press release Sunday, Virginia-based retailer USA Discounters said the company’s practices and policies in dealing with military customers were “inaccurately” portrayed in my recent ProPublica article.

The release did not identify any errors.

The article, which also appeared in the Washington Post, detailed how the company courted service members, guaranteeing them credit on high-priced appliances and electronics, then sued them in Virginia if they fell behind on their payments, regardless of where they made their purchases.

If the service members did not show up in court, USA Discounters obtained a judgment and could seize their wages.

In its release, USA Discounters said ProPublica relied on a “handful” of claims made by military customers and that it garnished the wages of just “1%” of its military customers. The document did not say how many people that percentage represents.

Department of Defense payroll data obtained by ProPublica shows that the company seizes the pay of more active-duty military than any company in the country by a wide margin. As of January 2014, 230 service members were involuntarily paying USA Discounters a portion of their pay, the data shows.

While the company does not exclusively lend to service members, it has a store just a short drive from each of the country’s 11 largest military bases and advertises widely that it will give credit to all service members regardless of their credit histories. A clause included in the contracts of service members says they agree to be sued in Virginia should they default, no matter where they purchased their items.

Since 2006, the company has filed more than 13,470 suits in two Virginia courts.

In researching the practices of USA Discounters, I reviewed 70 of the company’s contracts for service members and non-military borrowers, all of which had been filed in court. I also interviewed former employees of the company, a judge who routinely presides over USA Discounter cases and a lawyer often appointed to represent absent service members.

I identified 11 recent court cases against active-duty service members to examine their treatment. The cases of four of these service members—all sued in Virginia even though none made their purchases there—were featured in the story.

I submitted more than 50 questions to USA Discounters about its practices. Timothy Dorsey, vice president of USA Discounters, released a statement in response, portions of which were included in the story.

In its release, USA Discounters states if a customer requests to be sued outside of Virginia, USA Discounters “honors that request.” The contract language does not state this option. I specifically asked if the company advised borrowers of this option and to provide an example of such a case. Both questions were not answered.

Paul Kiel covers business and the economy for ProPublica, reporting on the foreclosure crisis, consumer debt and other financial issues.

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