228 Kentucky service members to receive $1.2 million in debt relief
FRANKFORT, Ky. (July 29, 2014) — Attorney General Jack Conway, along with the Consumer Financial Protection Bureau (CFPB) and 12 other state attorneys general, today announced a settlement resolving allegations that consumer lender Rome Finance, which specialized in providing consumer financing to military servicemembers, engaged in predatory lending practices that cost servicemembers tens of millions of dollars. As a result of the settlement, 228 Kentucky servicemembers will receive $1.2 million in debt relief. In total, the nationwide settlement impacts more than 17,800 servicemembers who will receive $92 million in debt relief.
“Rome Finance targeted our servicemen and women by luring them into deceptive lending schemes with the promise of no money down and instant financing,” Conway said. “I’m pleased that this resolution will provide military members here in Kentucky and across the country with the financial relief they are owed.”
Rome Finance, which also operated as Colfax Capital Corporation and Culver Capital, LLC, financed consumer debts primarily to servicemembers, typically for computers, gaming systems, and other goods and services from retailers online or at malls near military bases.
The states and federal government allege that servicemembers were urged to purchase goods in financing agreements that hid or insufficiently disclosed extremely high rates of interest and that as a result of these financing agreements, servicemembers ultimately paid Rome Finance multiple times the retail price for the products they purchased. Payments were deducted from the servicemembers’ paychecks and were secured by access to a bank account.
The multistate lawsuit alleges multiple illegalities by the company, including failing to accurately disclose finance charges and interest rates; knowingly or recklessly assisting in the practice of financing contracts with inflated prices of goods sold; violation of the Military Lending Act for excessive interest, onerous provisions, and for requiring allotment payment backed by access to a bank account; violations of State and CFPB’s unfair, deceptive, or abusive acts and practices prohibitions by financing consumer loans and/or collecting on consumer loans; and failing to provide required periodic disclosures.
Under the terms of the settlement, approved earlier this month by the U.S. Bankruptcy Court for the Northern District of California, servicemembers will keep all merchandise financed through Rome Finance, and all outstanding debts owed to the company have been erased and marked “paid in full” with consumer finance reporting agencies. In addition, today’s resolution bans new business by the company, which is no longer in operation, and its principals. Rome Finance has been the subject of previous state and federal enforcement actions and Colfax is currently in Chapter 7 bankruptcy.
Other states participating were Colorado, Delaware, Florida, Georgia, Indiana, Iowa, Massachusetts, Michigan, New York, North Carolina, Tennessee and Vermont.