Military Personnel are Prime Targets for Consumer Abuse

America’s military bases are surrounded by exploitive businesses that charge far more for financial services than the mainstream market.  Military personnel earn regular paychecks but are often low-income, economically unsophisticated young adults, a combination that makes them perfect targets for predatory merchants.  Predators deceive their customers by adopting “affinity marketing” tactics – using military-sounding names and former service people as employees while also hiding behind the seemingly “official” imprimatur of the military community’s news media.  Their products are wreaking havoc with our nation’s soldiers and sailors. 

Payday lending, cash advance and other “fast cash” businesses. 

These businesses lend small amounts of cash for short terms, like two weeks, and charge exorbitant interest rates – sometimes 500 % or more per year.  Their goal is to keep customers on a debt treadmill, rolling from one expensive short-term loan to the next.

Automobile-related scams

These are the biggest source of problems for service people.  “Yo-yo sales” on new cars can be illegal.  Buyers leave with the car, only to be called back and told “the loan’s been denied.”  To keep the car, the buyer must agree to more expensive loan terms. “Buy here/pay here” used car dealers peddle convenience, but sell overpriced and often inferior used cars with expensive financing. 

Veterans’ benefits buyouts

One of the most costly scams, these are loans in which lump-sum payments are offered in exchange for streams of veterans’ benefits.  These deals, which violate federal lending laws, can easily cost individual veterans tens of thousands of dollars. 

How NCLC Can Help

NCLC seeks funding to form partnerships with groups interested in protecting the consumer rights of military personnel.  As resources permit, NCLC can provide the following services: 

Advocacy.  Stronger enforcement of existing laws will require better cooperation between JAGs and private lawyers, prosecutors, state attorneys general and the Federal Trade Commission.  NCLC is also helping to develop consumer protection laws with real teeth.

Consumer education.  Education is in no way a panacea!  But it can help.  NCLC publishes easy-to-understand guides and brochures to help consumers avoid scams and make smart choices. 

Congress caps interest on credit for servicemembers at 36%:

- Press Release: Military Lending Act to take effect October 1
- NCLC Press Release expressing disappointment with final DOD regulations (9/4/2007)
- Comments on draft DOD regulations (6/11/2007)
- NCLC Recommendations and Summary (2/5/2007)
- Press Release (Sept. 2006)
- Statute: Talent/Nelson Amendment to Sen. John Warner National Defense Authorization Act, H.R. 5122 (Passed Congress 9/30/2006)

In Harm's Way - At Home: Consumer Scams and the Direct Targeting of America's Military and Veterans

Consulting Services.  Our experts keep up with the latest developments in the changing world of consumer law and can help advocates respond to the most current abuses.  For more than 35 years, NCLC has been on the forefront of developments affecting consumer law and litigation.  Our breadth of experience and access to resources allow us to offer high-quality assistance.