Targeting Businesses Targeting The Poor

The report found that a majority of the District's foreclosures -- predominately in Wards 5, 7 and 8 -- involved borrowers who had subprime loans carrying prepayment penalties and high fees.

Singer's office also cited rent-to-own centers, which lease furniture and appliances to customers with the eventual goal of ownership. The report said customers are often charged double or triple the price of the same item obtained from a traditional retailer.

"These high-cost financial products and services can drain scarce resources from already-vulnerable District households," the report said. "Low-income residents need responsible, affordable financial products that satisfy short-term needs and offer the promise of building wealth."

Frederick Lightfoot, 58, of Brightwood, is the type of customer Singer's office is trying to protect.

In 2004, Lightfoot said, he purchased a desktop computer and printer, a sofa, table lamp and end table at USA Discounters at Hechinger Mall. Because of Lightfoot's poor credit -- outstanding child support, a repossessed car -- the Navy pensioner was charged an annual rate of nearly 24 percent. His bill totaled $6,000, for which he had to pay $327 a month. He also was charged $708 for a warranty and a debt cancellation fee of $1,121.29. Lightfoot fell behind on his payments, and the items were repossessed.

"I got to the point when I couldn't pay the bill," Lightfoot said. "I want nice things, I figured I could do it, but I couldn't it."

USA Discounters said it offered to renegotiate Lightfoot's contract and annul his cancellation fee and warranty, but Lightfoot refused.

"If the attorney general's office honestly wants to improve and help the customers, they should focus their efforts on rent-to-own, not those who are making legitimate contracts," said Timothy W. Dorsey, vice president of USA Discounters.