Conn’s Inc, the electronics and furniture retailer, has settled with the Justice Department to resolve allegations that they violated the Servicemembers Civil Relief Act (SCRA) by charging at least 184 servicemembers excess interest on their purchases.
Conn’s has 143 stores in 14 states. It has its head office in The Woodlands. For the year ended 31 January 2020, the company had revenues of $1.5 billion. A quarter of this comes from finance charges.
Under the SCRA, military members can be charged no more than 6% interest on retail installment contracts.
In May 2018, a Sergeant called Travon Sargent, with the Oklahoma National Guard received orders to deploy to Fort Hood the following month. Under the terms of the act, he was eligible for the 6% interest rate as soon as he received his orders. Conn’s kept charging him 21% interest despite repeated requests from his wife. They eventually reduced it to 6%. However, they only backdated it to June 2018 and not the date he received his orders.
However the November statement sent to Sergeant Sargent listed the interest rate as 21%. So, in December 2018, a United States Army Staff Judge Advocate wrote to Conn’s asking for confirmation that the interest rate had been reduced to 6%. The Conn’s legal department never responded.
Justice Department began an investigation in March 2019. Conn’s admitted that 185 servicemembers, who applied between March 2014 and May 2019, did not receive the full SCRA benefits. Conn’s written policy and procedures on SCRA had clauses and restrictions that are not part of the SCRA. One example was that Conn’s required at least one payment on account before entry on active duty in order to get the 6% interest rate.
Conn’s has issued $59,216 in refund checks and issued credits of $28,589 to 185 servicemembers ($475 average). It also agreed to pay each servicemember an additional $500 and take steps to instruct the three major credit bureaus to delete negative credit entries that arose from their actions. The company also agreed to pay a $50,000 fine.