WATERTOWN – Attorney General Eric T. Schneiderman has announced that his office has secured a $540,000 settlement with Freedom Stores, Inc., and Freedom Acceptance Corp. (collectively, “Freedom Stores”) a now-defunct retailer and financing firm based in Norfolk, Virginia, after the companies fraudulently charged hundreds of New York service members who purchased consumer goods from Freedom Stores. The Attorney General’s settlement will clear debt and judgments fraudulently charged to hundreds of New York soldiers at various locations across the United States. Over 250 finance accounts, with balances ranging up to $8,600, and averaging $2,100, will all be brought to zero balances; judgments taken against soldiers by the company will be eliminated, and negative trade lines will be removed with credit reporting bureaus for the New York service members.
"Freedom Stores took advantage of service members using deceptive practices, roping them into high interest contracts and ruining their credit -- and sometimes their military careers. These actions are nothing short of unconscionable. I am proud that we were able to wipe out the debts for hundreds of men and women who stand up for us every day," said Attorney General Schneiderman. "We will keep working to root out fraud and protect our soldiers, who sacrifice so much to protect us.”
The settlement is the result of the Attorney General's office’s investigation into Freedom Stores. The investigation revealed that the practices at Freedom Stores were part of a larger scheme to defraud service members by deceptively selling them consumer goods at wildly inflated prices and locking the soldiers into revolving credit agreements with undisclosed fees and very high interest rates paid directly from military paychecks or personal bank and credit accounts to unlicensed lenders. The debts were aggressively pursued by Freedom, often with no accounting for how or if the payments were being applied to the debt. The collection upon these defective contracts within the state of New York violates state law.
Freedom Stores largely ceased doing business in 2015, but continued to collect on contracts entered into before that date. Debt associated from its business operations continued to impact service members by tainting their credit, and in some instances threatening security clearances or ending military careers.
According to the terms of the settlement, the settling companies will contractually release all of the approximately 257 New York State soldiers from their debt and related judgments. The company will also clear all negative credit reports related to the contracts.
