Jen Kiggans: Predatory Lending, Including Payday Lending Practices, Disproportionately Hurt Military Families

Predatory Lenders Will “Pop Up” Around Military Bases To “Prey On Young Military Members”

Predatory Lenders Will “Pop Up” Around Military Bases To “Prey On Young Military Members.” “After serving overseas, military service members return home to face a new economic reality that often includes, unfortunately, lenders looking to take advantage of their vulnerability. These so-called predatory lenders, which pop up around military bases, try to entice or deceive young soldiers into taking out loans that impose abusive or unfair terms. ‘Predatory lenders like to prey on young military members because they’re often inexperienced with money, have little to no credit and are usually very excited to spend that first paycheck,’ said certified financial planner Tara Falcone, founder of the financial education company ReisUP. She is also a former hedge fund analyst and is married to an officer in the U.S. Navy. The end result is a loan that carries a hefty price tag, with sky-high interest rates and hidden fees. For example, if a soldier is convinced to take out a payday loan, which requires a check dated for the next payday, he could ultimately wind up with an interest rate near 400%. Unscrupulous auto lenders and credit card companies have also been known to target members of the military.” [CNBC, 7/3/19]

HEADLINE: “Why Military Families Need Protection From Predatory Lenders” [Military Families Magazine, 1/7/19]

HEADLINE: “Predatory Lenders Prey On Military Members. Here’s How To Avoid Being Victimized” [CNBC, 7/3/19]

According To A Javelin Strategy & Research Study, 44% Of Active Duty Military Used Payday Loans In 2017. “For many military families, payday loans and other predatory borrowing options become a source for quick cash. An estimated 44 percent of active duty military used payday loans in 2017, while 68 percent tapped tax refund anticipation loans, according to research by Javelin Strategy & Research.” [Military Families Magazine, 1/7/19]

Payday Loans Taken By Servicemembers Can End Up With Interest Rates At Nearly 400% “For example, if a soldier is convinced to take out a payday loan, which requires a check dated for the next payday, he could ultimately wind up with an interest rate near 400%. Unscrupulous auto lenders and credit card companies have also been known to target members of the military.” [CNBC, 7/3/19]

Payday Loans Can Be A Debt-Trap For Military Service Members. “Payday loans can be a debt-trap for military service members, with many predatory lenders located near military bases. Federal regulations have tried to curtail the practice with mixed success. All military personnel should know their rights and be able to spot predatory lending practices to avoid being made a victim.” [Military.com, How To Protect Yourself From Predatory Lenders, Accessed 8/25/23]

Many Lenders Have Exploited Loopholes To Trap Military Family Members Into High Interest Loans. “Congress passed the Military Lending Act (MLA), in 2007, to protect servicemembers and their families. Active-duty personnel, active National Guard and Reserves, and their dependents were supposed to be shielded from predatory lending practices. However, the new law did not go far enough and many lenders exploited loopholes to continue trapping military family members into paying high interest on loans. ‘We have to revisit this,’ said Sen. Dick Durbin, D-Ill., chairman of the defense appropriations subcommittee. ‘If we're serious about protecting military families from exploitation, this law has to be a lot tighter.’” [Military.com, How To Protect Yourself From Predatory Lenders, Accessed 8/25/23]

HEADLINE: “Some VA Lenders Are Still Exploiting Troops And Veterans, Report Alleges.” [Military Times, 8/4/21]

Troops And Veterans Were Being “Grossly” Overcharged For VA Home Loans. “Troops and veterans in some cases are being “grossly” overcharged for VA home loans, and federal regulators need to suspend or ban alleged bad actors and strengthen their oversight over lenders, according to a new report from the office of Rep. Katie Porter, D-Calif.” [Military Times, 8/4/21]

The Report Found That “Grossly Overpriced Cash-Out Refinancings Continue To Scam Veterans.” “The report alleges that NewDay USA and The Federal Savings Bank ‘continue to aggressively market cash-out refinancings with fees and interest rates that could cost borrowers tens of thousands of dollars more over the life of the loan compared to other lenders.’ ‘This report finds that grossly overpriced cash-out refinancings continue to scam veterans,’ Porter stated in an introduction to the report released Aug. 3.” [Military Times, 8/4/21]