The Times, Trenton

Unscrupulous Lenders Still Target Military Families

The Times of Trenton — Monday, November 17, 2014

By Beverly Brown Ruggia
Times of Trenton Guest Opinion Column

In November, New Jerseyans celebrate Veterans Day, a solemn but heartfelt occasion when we pause to honor those who have served our country through military service. On Thanksgiving Day, many of us also welcome home family members who serve in the military. We give thanks that they are safe and show them our appreciation for the sacrifices they have made in order to keep us safe. Ironically, on every other day of the year, we allow many servicemen and -women to be treated quite dishonorably and with very little appreciation for their sacrifices.

The sad truth is that while many service members are on active duty, their finances are under attack, not by a foreign enemy overseas, but by predatory lenders right here at home.

The transitory lifestyle of military service members and their families can mean they become dependent on service and retail outlets on or near their bases. Many are young and inexperienced in managing their finances without guidance from their families. Predatory lenders know this all too well and historically open offices immediately outside the gates of military bases. More than willing to take advantage of a vulnerable and captive pool of consumers, they enthusiastically peddle lending products such as debt-trap short-term loans. Some businesses are downright deceitful and even imply that they are officially associated with or represent the Department of Veterans Affairs.

In 2007, Congress enacted the Military Lending Act, intended to end harmful lending practices that target military personnel and their families. Tragically, less than a decade after the MLA was passed, unscrupulous companies in pursuit of maximum profits take advantage of loopholes in the law and continue to target and charge exorbitant rates to service members and their dependents. In states where lending regulations are weak, lenders are charging military personnel annual rates as high as 500 percent for payday, auto title and tax refund loans.

Although payday lenders are prohibited from opening up shop in our state, active-duty service members from New Jersey and their families are very likely to be stationed in states where there are few or no borrower protections. Currently, 13 states have title loan loopholes and 11 states have payday loopholes. Taken together, 52 percent of all service members are stationed in those states. They are also vulnerable to aggressive marketing of toxic high-interest loans via the internet.

Usury and loan shark-style lending is a serious problem for all consumers, especially for those who are struggling to find living wage jobs and stabilize their financial future. Congress would be wise to address the larger issue with stronger regulations. It is unconscionable that lenders are able to target military personnel and their families with impunity.

New Jerseyans must urge Secretary of Defense Charles Hagel to adopt a Department of Defense proposal to expand and strengthen the MLA. By doing so, we can help put an end to exploitive and predatory lending practices that target and trap military personnel and their families into debt cycles that can cripple their careers while they are active and threaten their financial security when they become veterans.

New Jersey has a long history of protecting consumers against predatory lending by enforcing a criminal usury cap of 30 percent. The cap specifically protects active-duty military personnel and veterans alike. But we must strengthen financial protections for all servicemen and -women and ensure that no matter where soldiers go in this country, predatory lenders cannot undermine their financial stability while they are in the military and their ability to retire as veterans who can look forward to a stable financial future.

Our military service members are under attack. A few members of the New Jersey congressional delegation have already signed a House letter in support of adopting the proposed revisions that would strengthen the MLA. But the entire New Jersey delegation and every elected state official must tell Secretary Hagel that the people of New Jersey want him to close loopholes in the Military Lending Act in order to protect those who protect us every day and every month of the year.

Beverly Brown Ruggia is the community reinvestment organizer for New Jersey Citizen Action, a HUD-certified counseling agency that launched the Financial Resource Education and Empowerment (FREE) program for veterans and military personnel.

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