Local News

Electronics retailer accused of ripping off soldiers

Posted May 19, 2010 5:36 p.m. EDT
Updated May 20, 2010 5:08 p.m. EDT

SmartBuy has a kiosk at Cross Creek Mall in Fayetteville.

— The New York Attorney General's Office has filed suit against a Fayetteville-based company, alleging that it sold computers and other electronics to military personnel at inflated prices.

, also alleges that SmartBuy would then steer customers to affiliated lenders that offered financing plans that carried annual interest rates of more than 200 percent.

In a May 10 letter to Defense Secretary Robert Gates and Army Secretary John McHugh, New York Attorney General Andrew Cuomo said SmartBuy has operated at least nine stores near military bases in seven states, including Fort Bragg; Fort Drum, N.Y.; Fort Hood, Texas; and the Camp Pendleton Marine base in California.

Sales staff were trained to target shoppers in uniforms or with military-style haircuts, including personnel about to deploy to Iraq or Afghanistan, Cuomo said.

The North Carolina Attorney General's Office has received few complaints about SmartBuy, a spokeswoman said.

SmartBuy has a kiosk at Cross Creek Mall in Fayetteville, but a salesman there declined to comment Wednesday about the lawsuit.

Fort Bragg in January placed SmartBuy on the off-limits registry, which is a list of businesses soldiers are to avoid.

The suit alleges that SmartBuy purchases televisions, computers and other electronics at big-box stores in North Carolina, then jacks up prices by 225 to 325 percent and sells them with "excessive financing arrangements."

Customers were rarely told the final price up front, and payments were taken directly from the buyers' bank accounts, according to the suit. If a military customer disputed a loan agreement, SmartBuy's lenders would go straight to the soldier's commander, the suit states.

The company's owners couldn't be reached Wednesday for comment. They recently moved the corporate office from a building on Ramsey Street.

Woody Webb, a Raleigh attorney representing SmartBuy, issued a statement Wednesday disputing Cuomo's allegations.

"SmartBuy has never, ever charged 244 percent in interest on any purchase," Webb said. "SmartBuy does not deceive its customers, all of whom are made aware that the exact merchandise SmartBuy sells may be available by other sellers at a lower price."

The lawsuit seeks to bar SmartBuy from doing business in New York and wants the company to pay restitution to customers.