Payday lenders target military personnel
The US military is targeted everyday in Iraq and Afghanistan. Now, some may be targets when they're at home. Some call it an enemy within. We have new information on a growing problem on military bases, where the people who fight for their country are fighting to keep more money in their wallets.
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By Flint Adam
NewsChannel 3
When a soldier returns home, he or she returns to a life of bills, family-care, and other expenses. Young soldiers don't make a lot of money and many of them haven't learned how to manage their money. So the bills add up and sometimes soldiers can't pay up, so they look for help. That's when trouble starts.
They are targets, each and every day, while trying to complete their mission in Iraq and Afghanistan. US soldiers face a tough battle overseas, but life isn't necessarily easier once they return home.
Back on US soil, soldiers have families, bills and expenses. Sometimes, a young soldier's wallet wears too thin, and help is needed. That's when they become targets, once more.
"They are a perfect target for payday lenders."
Major General Michael Lehnert commands most Marine bases west of the Mississippi. He says soldiers find nothing but trouble behind a payday lender's door.
"The reason they get in trouble is just the extraordinary interest rates that are being charged by payday lenders."
Here's an example. A soldier borrows $200 from a payday lender at 17-and-a-half percent interest. Two weeks later on payday, the soldier is expected to pay back the loan and interest, a total of $235. But often times, a soldier's paycheck isn't enough to get back on track, so the loan isn't paid off. Every two weeks thereafter, until the loan is paid off, the interest is charged again. In this case, the interest would equal 455 percent after one year. That's $910 interest on a $200 loan.
"That is not a legitimate profit."
But General Lehnert says this is a legitimate problem. He recently spoke with a group of 1,400 Marines about payday loans.
"I asked the question, ‘how many of you have someone that you know personally who has been in trouble with payday lenders, who has gotten in trouble financially with payday lenders.' Nearly every single hand went up."
Lehnert believes America's armed forces are being preyed upon by payday lenders. There's research that backs him up. A joint California State and University of Florida report finds that payday loan centers are disproportionately found near military bases.
Based on population, researchers believed a town the size of Twentynine Palms should have one payday lender. They found seven, all huddled near the Marine base.
At Camp Pendleton, near Oceanside, researchers expected five payday lenders. They found twenty-two near the south and east gates of the base. And it's not just near military bases that soldiers are targeted.
"Nowadays, a soldier doesn't even need to leave the base in order to get a loan. On the internet, there are literally scores of websites offering military payday loans."
In their defense, advocates of the payday lending industry say they're only offering a service. No one has to take their offer. And their business is legal. But soldiers are still getting in trouble.
"We can't do that to our military. It's just wrong."
37th District Senator Jim Battin says new legislation may help change some of that. Assembly Bill 1965 is being reviewed in the California legislature. It could make it harder for payday lenders to deal with soldiers and offer more protection from debt while they're overseas.
"It does defer interest, while they are deployed."
But is the bill a final solution?
"The bill, in my view, does not go nearly far enough."
General Lenhert says the state needs to adopt a payday interest rate cap, like several other states have. He says we owe it to our soldiers.
"We really have to ask ourselves as a nation, how does it look to send these young men and women, who are defending our nation, and then to come home and then to allow institutions to prey on them financially and to cause them financial grief? I just don't think that's the way, as America, we ought to be and how we ought to be treating these young men and women. I just think it's wrong."
Senator Battin says, if Assembly Bill 1965 passes, it would become law on January 1st of next year.