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July 29, 2014

Abusive Military Consumer Lender to Stop Collecting from Service Members & Veterans, Must Erase Debts & Repair Credit

Miller announces $92 million in relief to more than 17,800 U.S. service members and veterans worldwide through agreement with Rome Finance Co. Settlement includes more than 100 Iowans; agreement likely to include additional 5,400

(DES MOINES, Iowa) A nationwide lender that Attorney General Tom Miller alleges saddled active duty service members and veterans with artificially high financial debts for consumer goods must now stop collecting the debts, forgive outstanding balances, and help to repair damaged credit.

Under an agreement with Miller and 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 23,000 U.S. current and former service members worldwide, including more than 100 Iowans.  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.

Rome targeted active duty service members by financing consumer debts almost exclusively to them.  The company typically financed computers, gaming systems and other goods and services from retailers online or at malls near military bases.

“We allege that these individuals deliberately trained its sights on active service men and women,” Miller said.  “Unfortunately, many bravely serving our country also had to deal with a predatory and abusive lender back home,” Miller added.  “This agreement holds Rome Finance accountable and helps make things right for the victims of this troubling scheme,” Miller added.

Miller alleged that, through its contracts, Rome artificially and very substantially inflated the disclosed price of goods and services, hiding the true amount.  In many cases, the true annual percentage rate (APR) exceeded 200 percent.  A service member who bought a laptop computer, for example, may have paid several thousand dollars more than its actual value.

Rome required all 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.

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.

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.


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