DES MOINES – A nationwide lender that Attorney General Tom Miller alleges saddled active duty service members and veterans with deceptive and artificially high financial debts, undisclosed fees and charges for consumer goods must now stop collecting the debts, forgive outstanding balances, and help to repair damaged credit.
Under an agreement with Miller, 12 other states, and the Consumer Financial Protection Bureau, a military consumer lender commonly known as Rome Finance Company, based in California and Georgia, must liquidate the company and provide more than $91 million in debt relief to at least 17,800 consumers, including more than 100 Iowans. The victims are largely U.S. current and former service members worldwide.
Rome also did business as Colfax Capital Corporation and Culver Capital, LLC.
In addition to requiring the company to mark all outstanding debts as “paid in full” with consumer finance reporting agencies, the agreement bans the company and its principals from engaging in any form of future consumer lending, and demands cooperation in vacating judgments, which include more than 5,400 additional consumers. Miller expects the agreement to aid more than 23,000 service members and veterans.
Rome targeted active duty service members by marketing computers, gaming systems and other goods and services. iRome and its associated retailers typically lured service members at mall kiosks near military bases, and products were also sold online. Buyers were promised instant financing with no money down for computers and electronics. Consumers approved for credit signed financing agreements. In some cases Rome assumed the role as an initial creditor, and in other cases the company bought retailer financing contracts.
“We allege that these individuals and their companies deliberately trained their sights on active duty men and women,” Miller said. “Unfortunately, thousands of men and women who have served our country had to deal with an adversary, in the form of a deceptive and abusive lender.”
Miller alleged that, through its deceptive contracts, Rome artificially and very substantially inflated the disclosed price of goods and services and did not accuirately disclose the a financing amounts, ihiding the true amount. The inaccurate information prevented consumers from making informed decisions about whether to take out credit.
In many cases, the true annual percentage rate (APR) exceeded 100 or 200 percent. A service member who bought a laptop computer, for example, may have paid several thousand dollars more than its actual value over the duration of the loan.
Rome also withheld complete information about the loans on billing statements and illegally collected on loans that were void.
Rome required service members to pay by “military allotment.” In most cases, Rome withdrew money monthly from a service member’s paycheck, even before the service member received his or her pay. Service members who attempted to stop payment damaged their credit record. In many cases Rome would also notify commanding officers, so service members could face the threat of discipline or damage to their military career, including the potential loss of their security clearance.
Miller, state attorneys general and the CFPB alleged that Rome violated state and federal consumer laws, 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;
- Failing to provide required periodic disclosures;
- Violating state and federal unfair, deceptive, or abusive acts and practices prohibitions by financing consumer loans and/or collecting on consumer loans;
- Violating the Military Lending Act for excessive interest, onerous provisions, and for requiring allotment payment backed by access to a bank account.
Under the agreement, the company neither admits nor denies wrongdoing. However, under the agreement, Rome must do the following:
- Provide approximately $92 million in debt relief by stopping collections on any outstanding financing agreements;
- Update credit reporting agencies and notify service members and other consumers of debt status;
- Cooperate with those who seek to vacate court judgments;
- Pay redress to those who paid excess finance charges;
- Company principals, Ronald Wilson and William Collins, are barred from any future consumer lending.
Victims may be eligible for additional future relief, though that has not yet been determined.
“Our agreement holds Rome Finance and its principals accountable, and it also helps make things right for those who were victimized by this truly offensive and predatory scheme,” Miller said.
A federal bankruptcy judge in the Northern District of California approved the agreement after staff from Miller’s office and four other states, along with the CFPB, joined in Rome’s bankruptcy proceeding to represent the interests of service members. Rome Finance has been the subject of previous state and federal enforcement actions and Colfax is currently in Chapter 7 bankruptcy.
Miller, whose office helped lead the negotiations, has directed the Consumer Protection Division to attempt to contact every current and former service member from Iowa who is potentially affected by the settlement. The Consumer Protection Division will also provide assistance to service members whose credit history may have been damaged by Rome’s credit reporting or judgments. Victims may be eligible for additional future relief, though that has not yet been determined.
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