Finance Company to Provide $92 Million in Debt Relief for Military Service Members Under Federal-State Settlement
Estimated 90 Massachusetts Military Members to Receive $650,000 in Total Consumer Relief as a Result of Settlement with Rome Finance Company
BOSTON – More than 17,000 military service members and consumers throughout the country harmed by a predatory lending scheme will receive about $92 million in debt relief under a settlement filed today involving Massachusetts, the federal Consumer Financial Protection Bureau and 12 other states, Attorney General Martha Coakley announced today.
The settlement with Colfax Capital Corporation and Culver Capital, LLC, also collectively known as Rome Finance, will bring an estimated $650,000 in relief to more than 90 Massachusetts service members currently subject to the deceptive lending contracts with the company for electronic goods such as computers, videogame consoles, televisions, or other products.
“Thousands of honorable military members were taken advantage of by this company’s predatory lending scheme,” AG Coakley said. “Our office is committed to protecting the rights of veterans and active duty service members, and this settlement provides consumers affected by these deceptive practices the financial relief they deserve.”
Colfax, formerly known as Rome Finance Company, Inc., is a consumer product finance company based in California and Culver is its wholly-owned subsidiary, formerly known as Rome Finance LLC. Colfax offered credit to consumers purchasing electronic goods typically sold at mall kiosks near military bases or online retailers, with the promise of instant financing with no money down. When making purchases, service members and other consumers filled out a credit application to get approved for financing agreements. In some cases, Rome Finance was the initial creditor, or agreed to buy the financing contracts from merchants who sold the goods.
In the settlement, the regulators allege that Rome fraudulently and illegally financed these consumer purchases for military members. Rome Finance allegedly failed to provide accurate disclosures for payments, and deceptively understated or hid high interest rates on the loans. Service members ultimately paid Rome multiple times the retail price for the products they purchased.
The settlement requires Rome Finance, two of its principals and its successor corporations, to permanently cease and desist from any business in the field of consumer lending, and immediately take steps to dissolve the companies. Consumers may keep the merchandise they purchased, and contracts will be reported as “paid in full” to the credit reporting agencies. Colfax will also work with consumers to vacate Rome Finance collection judgments relating to the financing agreements under its current bankruptcy case.
Participating in this national effort with AG Coakley, and led by New York Attorney General Eric Schneiderman, were the federal Consumer Financial Protection Bureau, and attorneys general in Colorado, Delaware, Florida, Georgia (participating through the Georgia Governor’s Office), Kentucky, Indiana, Iowa, Michigan, North Carolina, Tennessee and Vermont. The CFPB also entered a consent order with these entities.
Consumers seeking more information about this settlement can contact the Attorney General’s Public Inquiry and Assistance Center at (617) 727-8400. Rome Finance will provide notice to all affected consumers explaining that they are no longer obligated to make payments under their existing contracts.
This matter is being handled for Massachusetts by Assistant Attorney General Lisa Dyen of the Attorney General’s Consumer Protection Division.
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