Augusta Free Press

Herring and CFPB take action against retailer for abusive collections practices towards servicemembers

The Consumer Financial Protection Bureau (CFPB) and the Attorneys General of North Carolina and Virginia took action today to protect military servicemembers from illegal debt collection practices.

The CFPB alleges that Freedom Stores, Inc., Freedom Acceptance Corporation, and Military Credit Services LLC used illegal tactics to collect debts, including filing illegal lawsuits, debiting consumers’ accounts without authorization, and contacting servicemembers’ commanding officers. The CFPB and the states filed a consent order in federal court to require the three companies and their owners and chief officers, John Melley and Leonard Melley, Jr. to provide over $2.5 million in consumer redress and to pay a $100,000 civil penalty.

“Our nation’s servicemembers deserve better than to be targeted with illegal collections tactics when they are struggling to pay their bills,” said CFPB Director Cordray. “Freedom Stores and its affiliated companies were filing thousands of lawsuits in Virginia against consumers not from there, taking money from some consumers’ bank accounts without permission, and using the military chain of command to pressure and humiliate servicemembers. Today’s action sends a clear message that the Consumer Bureau will continue to aggressively defend the rights of servicemembers and all consumers.”

“Military servicemembers work hard to protect our country, but unfortunately their steady paychecks can make them targets for shady practices,” said North Carolina Attorney General Roy Cooper. “We won’t tolerate unscrupulous businesses that take advantage of military consumers.”

“This settlement resolves serious charges that Freedom Furniture engaged in abusive, harassing collection practices against Virginia veterans and servicemembers while also misusing Virginia courts to go after consumers who neither live nor do business in Virginia,” said Virginia Attorney General Mark Herring. “Our joint action will restrict such practices in the future, provide significant relief to those who have been wronged, and send a clear signal that we will aggressively pursue businesses that abuse Virginia consumers, especially any that prey on veterans and servicemembers. The Commonwealth of Virginia and our courts will not be a safe harbor for unfair and abusive practices. I appreciate the hard work on behalf of veteran consumers by my Consumer Protection Section and our partners at the Consumer Financial Protection Bureau.”

Freedom Stores (also known as Freedom Furniture and Electronics) is a Virginia-based furniture and electronics retailer that caters to U.S. military members with stores located near military bases nationwide. Freedom Stores offers credit to consumers purchasing its merchandise and transfers the contracts to an affiliated company, Freedom Acceptance Corporation. John Melley and Leonard Melley, Jr. also own Military Credit Services, which provides financing for purchases made at over 300 independent consumer-goods retailers, primarily catering to servicemembers.

The CFPB’s investigation found that Freedom Stores, Inc., Freedom Acceptance, and Military Credit Services and the owners, John Melley and Leonard Melley, Jr., engaged in illegal debt collection practices in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. These illegal practices include:

The Bureau’s investigation also found that Freedom Stores, Inc. violated the Electronic Fund Transfer Act by failing to properly disclose the terms of preauthorized transfers, and that Military Credit Services violated the Truth in Lending Act by failing to properly disclose the terms and interest rates on the loans it offered.

Under the terms of the consent order filed today, the defendants would be required to provide over $2.5 million in relief to consumers harmed by the companies’ illegal actions, and to pay $100,000 to the CFPB’s Civil Penalty Fund. The defendants would also be barred from further violations of the law and subject to monitoring by the CFPB.

The Bureau and the states’ complaint is not a finding or ruling that the defendants have actually violated the law. The proposed court order has been filed with the U.S. District Court for the Eastern District of Virginia and will have the full force of law only when signed by the presiding judge.

A copy of the complaint is available at:

A copy of the proposed order is available at:

Team of Destiny: Inside UVA Basketball's improbable run

Team of Destiny: Inside Virginia Basketball’s Run to the 2019 National Championship, by Jerry Ratcliffe and Chris Graham, is available for $25.

The book, with additional reporting by Zach Pereles, Scott Ratcliffe and Scott German, will take you from the aftermath of the stunning first-round loss to UMBC in 2018, and how coach Tony Bennett and his team used that loss as the source of strength, through to the ACC regular-season championship, the run to the Final Four, and the thrilling overtime win over Texas Tech to win the 2019 national title, the first in school history.