Tags: NY | Soldiers | Gouging | Lawsuit

Cuomo: Store Sold Soldiers Overpriced Electronics

Tuesday, 18 May 2010 06:16 PM


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New York Attorney General Andrew Cuomo on Tuesday sued companies he claims preyed on Fort Drum soldiers by selling them laptops, televisions and other electronic goods on credit at wildly inflated prices.

Cuomo says the SmartBuy store that operated out of Salmon Run Mall in Watertown sold products that were marked up by as much as 325 percent above the original retail price and financed the sales through automatic deductions from soldiers' payrolls.

Cuomo claims that SmartBuy targeted military members and sold them products that actually were bought from other retailers such as Costco and Walmart. Soldiers also ended up paying much more than the stated interest rates because of undisclosed markups and a "kickback" retained by the financing end of the scheme, he said.

The lawsuit names three lenders and their affiliated companies. None of the lenders involved is licensed in any state, Cuomo said.

In one case from last year, a soldier now serving in Iraq purchased a 47" LCD TV for $4,632.17, plus an additional 12 percent interest. His wife later found the same model for sale at Sam's Club for about $1,100, according to Cuomo.

A lawyer for SmartBuy, Gabe Nugent, said in a statement that the store does not deceive its customers. He promised a "vigorous defense" of the lawsuit.

"SmartBuy looks forward to continuing to service members (of) our military, those at Fort Drum in New York and elsewhere," Nugent said.

Cuomo said the SmartBuy shop in Watertown is closed. But in a letter to military officials, he said his investigation has revealed that other SmartBuy stores located near other Army posts use the same sales practices. The stores listed by Cuomo are in:

— Fayetteville, N.C., near Fort Bragg at Cross Creek Mall.

— Killeen, Texas, near Fort Hood at Killeen Mall.

— Colorado Springs, Colo., near Fort Carson at The Citadel.

— Lawton, Okla., near Fort Sill at Central Mall.

— El Paso, Texas, near Fort Bliss at Cielo Vista Mall.

— Savannah, Ga., near Fort Stewart/Hunter Army Airfield at Oglethorpe Mall.

Cuomo aides say a store in San Diego, Calif., near Camp Pendleton at Horton Plaza, closed early this year.

The defendants operated a similar scheme in Tennessee, which led to a 2009 court order shutting down the operation there, Cuomo said.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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