A sailor and his money are lucky to get together in the first place. The same goes for Coasties and soldiers and airmen and Marines. So it isn’t surprising to find packs of people surrounding military bases trying to part a service member and his cash.
While legislation has been put in place to protect service members from predatory payday lenders, there are still plenty of people out there who are figuring out loopholes in the law to get at those hard-earned military dollars.
Should these debt collectors be next on the list of predators who need a little legislative focus? Or is this a case of caveat emptor and military folks should have to look out for themselves just like everyone else?
Propublica reporter Paul Kiel recently published a story in partnership with The Washington Post about how the retailers like USA Discounters, Freedom Furniture and Electronics and Military Credit Services offer “high priced credit” to those serving in the military. (Read the whole story here).
If the service member can’t pay or does not pay, then the retailers sue -- and they usually win.
According to Department of Defense payroll data obtained by ProPublica, USA Discounters seizes the pay of more active-duty military than any company in the country.
In a company statement by USA Discounters in response to the story, the company claims they are "transparent" in their policies. Included in the paperwork for a new TV, furniture, washer/dryer, computer, etc., service members are informed about company policies about add ons, interest rates and the total price that will be paid. Yet there have been protests.
Service members say they are at a disadvantage because the lawsuits are filed and must be answered in person in Virginia where the company headquarters is located. When the service member acquired the debt in a different state, or has been transferred, or is deployed, it can be extremely cost prohibitive to travel to the court date. This practice is legal, but is it fair?
Practices like these aren’t the only ones being examined. In a recent report by the government’s Consumer Financial Protection Bureau, debt collection has quickly become the highest volume complaint category for military consumers.
Aggressive and deceptive tactics by debt collectors specifically targeting members of the military are a growing problem. Predatory debt collectors may contact a service member’s chain of command, threaten the service member’s security clearance or rank, or threaten punishment under the UCMJ. That stuff isn’t legal. (And if you experience this, please file a complaint with the CFPB's Office of Service Member Affairs here. Also take a look at their online education tool about debt collection here.)
Is this a problem that hurts too many young service members today? What do you think should be done?
Take our poll and then check out the results below.