USA Discounters customers ask court to prohibit collection on accounts

By Caroline Salls

Pittsburgh, March 22 – USA Discounters, Ltd. customers filed a class action lawsuit Tuesday that asks the U.S. Bankruptcy Court for the District of Delaware to prohibit the collection of accounts receivable, which were allegedly procured in violation of state laws.

The plaintiffs said the total amount of accounts receivable was more than $75 million when USA Discounters filed bankruptcy, and “over the years, the debtors have collected tens of millions of dollars in illegally obtained proceeds from victimized consumers.”

“This complaint seeks to enjoin the debtors from collecting the illegally obtained proceeds from innocent consumers – mostly young soldiers, sailors, airmen and Marines who were defrauded by the debtors and are continuing to make payments on accounts receivable that the debtors generated in violation of state law.

According to the lawsuit, the company sold electronics and household goods “with extremely high mark-ups on credit to our nation’s military members, government employees and low-income consumers.”

The plaintiffs said almost all goods were sold on high-interest credit plans, and “virtually all of these credit plans were larded – without adequately informing consumers – with exorbitant credit insurance policies and add-on warranties.”

In addition, the plaintiffs alleged that the interest rates charged by USA Discounters would be close to the usury rate for the states in which the company operated.

“These costs of useless and superfluous warranties and credit insurance, as well as the inflated prices which accompany these loans do not represent a legitimate, reasonable cost to the plaintiff and other buyers and should be regarded as interest for usury purposes,” the lawsuit said.

The plaintiffs said USA Discounters continues to collect on millions of dollars of “usurious and deceptive loans.”

USA Discounters, a Norfolk, Va.-based retailer, filed for bankruptcy on Aug. 25, 2015. Its Chapter 11 case number is 15-11755.

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