US military personnel get $92 mln debt relief in lender settlement
WASHINGTON, July 29
WASHINGTON, July 29 (Reuters) - More than 17,000 U.S. military personnel and other consumers will receive about $92 million in debt relief as part of a settlement over a lender's alleged improper practices, the U.S. consumer watchdog and 13 states announced on Tuesday.
The Consumer Financial Protection Bureau said Colfax Capital Corp, which previously operated as Rome Finance Co, and a subsidiary used mall kiosks near military bases to lure borrowers into taking out loans to buy computers, televisions and other consumer products.
But regulators said Colfax hid expensive charges, using financing agreements that downplayed the costs of its loans.
Under the settlement, Colfax agreed to stop collecting on outstanding loan agreements.
Regulators also accused Colfax of withholding key information from billing statements about the annual percentage rates charged, and unfairly collecting debt that was legally void.
"Today, their long run of picking the pockets of our military has come to an ignominious end," CFPB Director Richard Cordray said in a statement.
Regulators in New York, Colorado, Delaware, Florida, Georgia, Kentucky, Indiana, Iowa, Massachusetts, Michigan, North Carolina, Tennessee and Vermont joined in the settlement with Colfax, which was based in California and Georgia.
"No one who serves our country in uniform, especially during a time of war, should ever fall victim to predatory financial practices," U.S. Defense Secretary Chuck Hagel said in a statement.
The settlement also bans Colfax and two owners, Ronald Wilson and William Collins, from consumer lending, the CFPB said.
Colfax is being liquidated in bankruptcy court, the consumer bureau said on its website. Neither the company's bankruptcy trustee nor a lawyer for Colfax immediately responded to a request for comment. (Reporting by Emily Stephenson; Editing by Leslie Adler)