Lenders Sink U.S. Soldiers Into Debt

ASSOCIATED PRESS ^ | December 16, 2003 | RUSS BYNUM

[BBell]

Lenders Sink U.S. Soldiers Into Debt By RUSS BYNUM ASSOCIATED PRESS

FORT STEWART, Ga. (AP) - On Gen. Screven Way, the one-mile strip of fast-food joints and pawn shops leading to the front gate of Fort Stewart, getting a cash loan of $100 to $500 is about as easy as buying a cheeseburger.

Numerous strip-mall businesses bear names like Check Into CA$H ("Need Cash Today? It's Easy as 1-2-3"), First American Cash Advance, Gold Check C.S. Payday Advance, and PJ Cash ("Civilian and Military Welcome").

Fort Stewart has declared these so-called payday lenders enemies at its gate, accusing them of preying on U.S. troops with high-interest, short-term loans that plunge them deep into debt.

"It's like riding a merry-go-round - once you get on, it's hard to get off," said Frederick Sledge, an emergency relief officer at Fort Stewart whose office gives interest-free loans to soldiers in financial trouble.

Military bases across the nation have become magnets for payday lenders, which charge fees as high as $30 every two weeks per $100 borrowed - equal to a 720 percent annual interest rate.

Earlier this month, officials from Fort Stewart and Kings Bay Naval Submarine Base urged Georgia lawmakers to crack down on such loans, which are illegal under state law but thrive because of lax enforcement.

Lt. Col. Russ Putnam, a Fort Stewart lawyer, told legislators that stress over paying off payday loans hurts troop morale and the combat readiness of the post's 3rd Infantry Division, which led the assault on Baghdad. In extreme cases, soldiers saddled with debt must be discharged.

"When we lose those people because of payday check cashing, they're as good as dead to us. They are gone," Putnam told the lawmakers.

The Community Financial Services Association, which represents about 15,000 payday loan stores nationwide, denies its members are taking advantage of soldiers. In March, the association urged its lenders to suspend the collection of loan payments by troops sent to the war in Iraq.

The CFSA says that in any case, only about 2 percent of customers are active-duty military.

Jet Toney, a lobbyist for payday lenders in Georgia, said perhaps the military needs to focus more on educating troops about money instead of bashing payday lenders as predators.

"They're not preying on anybody - they're just open for business," Toney said. "It strikes me hard that the military protests so much when they have some responsibility on their end as well. How many 18-to-22-year-olds make perfect financial decisions?"

Navy Petty Officer 2nd Class Jason Withrow, who works on a nuclear submarine at Kings Bay, took out a payday loan to make ends meet after being hurt in a car wreck. A back injury had forced him to drop his second job loading beer kegs at the Navy exchange. Withrow soon found himself taking out loans with other payday lenders to pay the interest on his initial advance.

"In five months I spent about $7,000 in interest and didn't even pay on the principal $1,900," said Withrow, 24, of Brooklyn, Mich. "I was having marital problems because of money and didn't know what to do for Christmas for my kid."

He finally asked his commanders for help. The base emergency relief office agreed to pay off Withrow's loans. Now he has a schedule to repay the money over 18 months, with commanders watching over his finances.

"I will never go back to these idiots," Withrow said of his lenders.

Other bases say they have had similar problems with troops sinking into payday debt.

The lenders "are targeting the post primarily because of the assurance they'll be paid," said Richard Bridges, spokesman for Fort Carson, the Army post in Colorado Springs, Colo.

Lenders know they will recoup their money because they can get the Army to help them collect. Soldiers who do not pay up can face a court-martial and loss of security clearance, and in some cases are kicked out of the Army.

At Fort Carson a few year ago, officials began requiring lenders who advertise in the post newspaper to list their interest rates, some of which were as high as 560 percent.

At Fort Bliss, Texas, officials at the Army Emergency Relief office estimate nearly a tenth of the 10,000 active-duty troops stationed there have needed financial counseling because of payday loans and other debt problems, such as high-interest rent-to-own plans and bounced checks.

Georgia law caps annual interest rates at 60 percent, but violations are a misdemeanor and rarely prosecuted.

Yvette Walters, the wife of a Fort Stewart soldier, took a different approach, filing a class-action suit against Heritage Bank after taking out cash advances at annual interest rates of 340 to 592 percent. The bank settled last year by agreeing to pay $1.9 million to more than 11,500 people, many of them military.

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Associated Press writers Erin Gartner in Denver and Chris Roberts in El Paso, Texas, contributed to this story.

[BBell]

"I will never go back to these idiots," Withrow said of his lenders.

So tell me, whos the idiot.

[jmcclain19]

On college campuses this is prevalant as well, handing out credit cards with steep rates to just about everyone with a pulse to 18-22 year olds who've never left the house or handled their own finances before.

[BBell]

It's also happening in the military. Young military personnel are getting credit cards and charging themselves into deep debt. When I was in the service you had to get your platoon camander or C.O. to sign your application for a credit card at the local credit union. Not anymore.

[jdege]

How many 18-to-22-year-olds make perfect financial decisions?

Not nearly as many as would if we actually taught capitalism in the schools...

[jmcclain19]

We can't have that now, come on.

The Teacher's Union doesn't support Capitalism

[BBell]

It wouldn't due any good to teach allot of them. They are just self centered and STUPID and they know they got a steady paycheck and one of the organizations set up to help service members in REAL NEED will bail them out.

[steplock]

They've been around military bases as long as 'camp followers' (to be nice) have been.

[Ronin]

Those guys, like the el-cheapo jewelry stores, are just part of military life. They were out there when I was a boot back in the 70s, and were probably outside of the Roman Legion's many base camps.

But the worst lenders were always your fellow servicemembers. The $20 for $40 slush artists. Lots of those guys in my day...

[Lokibob]

"He finally asked his commanders for help. The base emergency relief office agreed to pay off Withrow's loans. Now he has a schedule to repay the money over 18 months, with commanders watching over his finances. "

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ARMY EMERGENCY RELIEF

 

ARMY EMERGENCY RELIEF IS RATED ONE OF THE BEST CHARITIES

In an article titled "The Best Charities" in the November 2003 edition of Reader's Digest magazine (pp 113 - 115), Army Emergency Relief was described as one of these charities who's worth trusting with your donated dollars. 

The article states that people eager to help out charitable organizations are buried under a mountain of solicitations, unable to tell who's truly deserving. People wonder if their checks will really help the cause, or will they just pay for more letters asking for more money?? Reporter John Mitchell put together a tip sheet on some well-run charities people might not know about - but they are groups who can be trusted with donated dollars. All of them are highly regarded by organizations that investigate and rate charities, and all keep their fund-raising costs low ( and your donations are tax deductible). AER is one of these organizations.

Also, AER was awarded four stars out of a possible four star rating by Charity Navigator, America’s largest independent evaluator of charities.  This indicates that our organization excels, as compared to other charities in America, in the area of strong fiscal management. This high consistency in our rating is an exceptional feat, especially given the economic challenges all charities have had to face in the last year.  This comes as SIGNIFICANT news for AER.  One more time it assures that we put our soldiers first and that we work hard to make sure we continue "Helping the Army Take Care of its own".

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From personal experience (20+ years ago) AER is a life saver for the young trooper.  I have seen them write a check for a soldier to fly home within hours of a parents death.

I hate what these check cashers are doing, but a young man or woman right out of their parents home are prey for these types of businesses.

A buck or two donated to AER (the AF and Navy have similar agencies) has a payback many times the donation.

 

[SJSAMPLE]

What a bullshit title.
If our soldiers are capable of liberating Iraq and capturing Saddam (and they are), then they're certainly capable of being responsible for their own actions.

When I was a company Executive Officer (XO), the local (Frankfurt, Germany) PX/AV club would hold annual sales in which they allowed practically anybody with a pulse to "purchase" thousands of dollars of stereo equipment on DPP (Deferred Payment Plan).

Practically every officer and NCO would complain to the community commanders that this was a big mistake, as over 50% of these accounts would become delinquent in the first three months. Sure enough, the letters started flooding in from AAFES, demanding that the commanding officers of the units start collecting THEIR past-due accounts.

Soldiers who have shown themselves as America's best don't get a pass on their personal finances.

[Crossbow Eel]

You can't be an E3 with a $38,000 car and a car payment equal to two weeks pay and a wife and two kids in the trailer park outside the base and make ends meet. Then, usually, the wife goes home with the kids to her folks house when hubby goes on deployemnts 3-4 times per year which is expensive if she flies commericial !

[BBell]

>>>Soldiers who have shown themselves as America's best don't get a pass on their personal finances.<<<

And they shouldn't get a pass either.

[BBell]

The Marine Corp has something they call Navy Relief. For a long time neither my wife nor I wanted to give one red cent to it. The reason was that the organization PERPETUATED bad behavior. I remember people who would get money from them and they had nicer cars,bikes,stereos,places to live or whatever then we had. It's been a long time since it was set up for that poor service member who needed money to go to his Grandma's funeral.

[Petronski]

"It strikes me hard that the military protests so much when they have some responsibility on their end as well. How many 18-to-22-year-olds make perfect financial decisions?"

"It's not our fault these members of the armed forces, who defend our asses, are dumb enough to fall for our lies."

[flair2000]

I also saw many abuses of Navy Relief during my time in the Navy. Many times, young military couples would spend all of their money on all kinds of garbage, and go run to Navy Relief when the kids had no milk and diapers.

Norfolk is loaded with Check-N-Go type places, dumpy furniture stores promising all kinds of credit to military personnel, and shady used car dealers. I think commands should educate their soldiers or sailors that if they hear "Attention, all military, E-1 and up! Guaranteed credit!" on a commercial on TV or on the radio, it is more than likely a less than reputable establishment. You get an allotment form to fill out from these people when you purchase something, so they know that they will get their money, while charging the "E-1 and up" about 25% interest. About all the young military person ends up with on the 1st and 15th is a pay slip or LES showing where all their money went.

[BBell]

I'm a former service member and my wife is a current member. My wife had subordinates who would use these legal loan sharks. She would have liked to have loaned some of them money herself but she couldn't as it would have been construed as a conflict of interest. You can't have people working under you owing you money. And may I add that she would have loaned them money interest free.

[BBell]

I'm glad I'm not the only one who saw these abuses.My opinion was they should suck it up and eat baloney on cheap white bread until they got there financial situations in order. God knows my wife and I ate allot of baloney and we never had any financial problems.

[Ronin]

I was a Navy Journalist and I and my shipmates did a LOT of information pieces on the horror stories in our base newspapers. I have no idea how many people actually read the things.

Broadway in San Diego used to be a gauntlet of vulture type shops just waiting for the new boots with their first paychecks to hit the streets. But heck, when I was a kid, no one was going to tell me where to spend my dough, and I doubt very much if the kids these days are any smarter.

There's a limit to what a command can do. They can't stop squids from going on liberty and they can't tell the vultures outside the main gate they can't sell to the squids.

They never showed it on Star Trek, but I imagine there are a bunch of similar shops run by Ferenji traders outside every starbase in the Federation.

It's always happens, it has always happened, and I am sure it will always happen.

I still think that the worst guys were their own shipmates who were always willing to slush them a $20 for $40, sometimes even $20 for $50.

That and the "friendly" Petty Officers who were always willing to invite a new boot to a "friendly" poker game and skin him.

Just all part of the joy of military service and I am sure it is the same in every military in the world -- with local variations, of course.

[armymarinemom]

If you have ever driven anywhere near a large post or base you will always see the quick loan businesses. I do believe that each one of my sons were warned to stay away from businesses like this from both family and the military. What irritates me is that you can't buy a decent used car anywhere near a large post or base. It seems that you can only find "We tote the Note" dealers. I think more young men and women get dinged over bad car deals that quick cash.

[Lokibob]

As a First Sergeant, I had numerous occasions to get AER help for the troops under me.

Even in the article, you see that the soldier got help to relieve the immediate problem, and the assistance to keep him straightened out. You can bet that every payday, the first thing he does is report to the first shirt (or Platoon SGT)with a budget. Should his/her parents have taught proper budgeting, yes, but the military still has some responsibilities.