New York Attorney General Andrew Cuomo has filed a lawsuit against SmartBuy and a group of related companies that allegedly “scammed members of the military” by selling them electronics and other products at markups of up to 325% of the original retail prices, and then “financed the sales” illegally through undisclosed credit lines linked to the soldiers’ bank accounts. According to the AG, the company aggressively targeted members of the military, and “salespeople were trained to specifically seek out people in uniform and people with military-style haircuts.”

“SmartBuy is part of a national network of companies and individuals that seek to profit by defrauding members of the military,” said Attorney General Cuomo. “Our lawsuit not only seeks to bar them from ever doing business again in the state, but also to vindicate the countless soldiers who were preyed upon and defrauded by SmartBuy and its affiliated companies.”

Cuomo’s investigation found that SmartBuy peddled products that were marked up 225 to 325 percent above the original retail price and financed the sales illegally. The sales were made only to members of the military through monthly direct withdrawals from payroll, known as “allotments,” and backed up with agreements giving the company access to the soldiers’ bank accounts. The soldiers were rarely told the final price of the product up front, nor was it explained that they were really opening a line of credit. If a soldier defaulted, SmartBuy and its affiliates illegally contacted the soldiers’ commanding officers. The tactic put service members in an untenable situation because Army regulations forbid soldiers from putting themselves in a financially precarious situation.

Examples cited by the AG’s office included a soldier getting ready to go to Afghanistan who was “told he could get a ‘really good deal’ by ‘bundling’ a purchase including a laptop, iPod, camcorder, and PSP for a monthly $90 direct withdrawal (allotment) from his paycheck. In reality, the final price SmartBuy charged was at least double the normal retail price for the items. Two days later, he attempted to return the unopened items, but he was told by the manager he could not return them without paying a $400 restocking fee in cash.”

The companies named in the lawsuit are Frisco Marketing of N.Y., LLC, doing business as SmartBuy and SmartBuy Computers and Electronics; Integrity Financial of North Carolina, Inc.; Britlee, Inc., doing business as MilitaryZone; GJS Management, Inc. and Rome Finance Company, Inc. and Rome Finance Co. LLC, all owned and/or operated by Fayetteville, N.C.-based John Paul Jordan, Stuart Jordan, and Rebecca Wirt, and Concord, California-based William Collins and Ronald Wilson.

Attorney General Cuomo Sues Nationwide Network That Scammed Members Of The Military [Press Release]

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