The Colorado attorney general has settled two lawsuits against lenders who allegedly targeted the military using illegal or unfair practices, according to news from the state.

Freedom Stores Inc. (also known as Freedom Furniture and Electronics and its affiliated companies Military Credit Services LLC and Freedom Acceptance Corp.) and USA Discounters Ltd (also known as USA Living and Fletcher’s Jewelers) will pay more than $3.9 million to consumers as a result of the settlement.

“My office will not tolerate those who seek to take advantage of military service members and other consumers to unjustly profit from illegal lending and collection schemes,” said Cynthia Coffman, state attorney general. “These settlements help ensure that Colorado’s consumer lending laws will continue to provide protection — particularly to our active military service members who may otherwise be exploited while on duty protecting our country.” 

The attorney general filed the suits against the lenders in 2015. The case alleged that Freedom Furniture and USA Discounters charged interest rates that exceeded the maximum allowed under state law. The case also focused on collection practices, which including suing military members in Virginia instead of Colorado — and using abusive collection techniques such as contacting the commanding officers who military members who were alleged to owe them money.

The lawsuit said that lenders sought to circumvent the state’s limits on interest rates by using an out-of-state bank. The AG said the companies had “improperly sought to ‘rent’ the bank for the purpose of evading Colorado law.”

The Colorado action in 2015 comes on the heels of similar action in Virginia and North Carolina, and from the national Consumer Financial Protection Bureau in 2014.

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The CFPB alleged 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 service members’ commanding officers,” according to news from the CFPB. “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 more than $2.5 million in consumer redress and to pay a $100,000 civil penalty.”

Freedom Stores closed its Colorado Springs store (near Academy Boulevard and Pikes Peak Ave.) in November, 2015.

In August, the consumer bureau shut down a fee scam by USA Discounters, according to the bureau. The company allegedly “tricked thousands of service members into paying fees for legal protections service members already had and for certain services that the company failed to provide,” the CFPB said. The bureau obtained more than $350,000 in refunds and USA Discounters paid a $50,000 civil penalty.

According to the Wall Street Journal, USA Discounters filed for Chapter 11 bankruptcy protection in August 2015 to have time to wind down its businesses. The company had closed 24 USA Living Stores before filing for bankruptcy protection. Its seven Fletcher Jewelry stores were not closed and were covered in the bankruptcy filing.