New Predatory Lending Directed At Military Families – What to Look Out For

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It’s summer time! What does that mean? Vacations! There’s nothing like falling off the grid for a few days while taking in some sun and sand or exploring a new place. However, it can sometimes take weeks to prepare for a vacation. Between making arrangements and making sure all of your bills are paid before you go, it quickly becomes clear that falling off the grid isn’t so easy.

Now imagine if you were in the service. Rather than a vacation, you might have to prepare for a deployment that can take you away from home for months or years at a time. But just because you’re deployed doesn’t mean you can forget about your responsibilities. Maybe you have a family back home, a mortgage to pay, and other bills that don’t go away just because you do. It’s not easy to manage a home and finances when you’re halfway around the world!

Now furthering that difficulty are companies that take advantage of the fact that service men and women overseas can’t protect their rights as easily as other consumers. Read on to find out more about this predatory behavior and how military families can protect themselves.

New Predatory Lending Directed at Military Families

There are a lot of services that are created specifically for military families. Typically, this is a good thing! They have unique financial challenges that should be accounted for – on top of having a lifestyle that takes them abroad at a moments notice or has them moving to a new home every few years. Unfortunately, all good things can be taken advantage of by predatory companies, and that’s what’s happening now.

As reported in The Atlantic, there are retailers that offer special financing just for military members, but charge nearly twice as much as regular retailers for their products. Then, if a service member falls behind on payments, the retailer sues them. Not necessarily in the state of the purchase though…and regardless of whether or not the service member is out on deployment:

“These are the conclusions of a new report jointly published by ProPublica and The Washington Post that looks at the financial ‘innovation’ of USA Discounters and two other companies, Freedom Furniture and Electronics and Military Credit Services, that sell goods to service members on credit and then, if they fall behind, go after them in Virginia courts, regardless of where the service members are based. Together the three companies have filed 35,000 lawsuits in a little under a decade.”

While technically legal, these lawsuits take advantage of the fact that service members can’t easily appear in court. And the prices of the products take advantage of service members’ trust:

“Part of the reason for the extremely high total is the expensive nature of USA Discounters’ credit. To begin with, ProPublica reports, despite its branding, USA Discounters often charges far more than typical retail prices for its goods. ‘An iPad Mini, for example, last year sold at USA Discounters for $699 when Apple’s retail price was $329.’ One soldier, Army Pvt. Jeramie Mays, bought a $650 laptop for $1,799, plus ‘$458 in add-ons.’ By the time he would have paid off his two-year contract, that $650 laptop would have cost him nearly $3,000.”

A service member or military spouse might think they are getting a good deal since these retailers market to them and offer them special financing. But in reality they are being charged far more and this could lead to even greater chance of default and, ultimately, lawsuits.

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How Service Members Can Protect Their Families

If you or your spouse is a service member, then you probably already have enough on your mind with keeping a home and finances in order while both of you have to move frequently or one of you is often out on deployment. Companies marketing their services specifically to you might seem like a breath of fresh air. Unfortunately, that’s not always the case.

The best thing you can do to protect yourself is to research any company or product that’s being marketed to you. For example, if you’re thinking of taking out a VA Home Loan, remember that there are multiple companies that offer these types of loans. Do an internet search of reviews for any company you’re thinking of going with to make sure you’re not about to sign with a company that is actually predatory.

The same goes for purchases. If a retailer near base has special discounts and financing for military families, do some price comparison before you buy. You might find these same products cheaper at other retailers or even online. While that takes away some of the benefits of easier to get financing, no product should be overpaid for just because of that. At the end of the day, if you’re paying double for a product – plus interest – then you’ve taken on a bad deal (no matter how much financing the retailer will do for you).

Why We All Need to Think Twice Before a Purchase

A special note to all consumers: no matter who you are, there are probably predatory companies seeking to take advantage of your specific situation. These tips above ring true to all of us: always research a company and product before signing on the dotted line and always price compare before you buy. A little bit of homework can save all American families a lot of money.

Image Credit: The National Guard

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