On his drive to work each day at Naval Station Mayport, in Jacksonville, Fla., retired Navy Capt. Bill Kennedy, a former aircraft carrier commander, passes three pawnshops, and two Cash Advance and two Florida Internet businesses.
These businesses, all within the final two-mile stretch before the base's main gate, anger Kennedy, who now heads a branch of the Navy-Marine Corps Relief Society. This nonprofit agency provides Navy and Marine Corps families with financial assistance and interest-free loans during family crisis.
Kennedy said he has helped hundreds of military families who have sought financial relief from what he calls "quick-cash" businesses and who ultimately get "hooked" into a relentless cycle of high-interest loans.
It's a poor choice," Kennedy said. "They don't have credit with the credit union, they don't have credit at the bank, they don't think of Navy-Marine Corps Relief, or they think of it too late. They see this instant cash and 'boom,' they're hooked."
On May 27, Kennedy was a part of a team of consumer advocates in Washington to talk about businesses they say are preying on the military, by offering quick cash through high-interest loans. During a press briefing, Steve Tripoli, a consumer advocate with the National Consumer Law Center, accused "quick cash" lenders of targeting the service members and veterans with unfair lending practices.
NCLC issued the 66-page report that day, entitled, "In Harm's Way -- At Home: Consumer Scams and the Direct Targeting of America's Military and Veterans." The center is a nonprofit organization that works to address consumer issues, especially those affecting low-income consumers.
Tripoli said the problem with these businesses is that they prey on the military, many of who have low incomes and live on fixed incomes, by offering loans at higher than normal interest rates.
These loan businesses are using deceptive practices that violate federal laws, he said, citing provisions of the Truth in Lending Law, designed to inform consumers of the amount that credit will cost.
Tripoli added that many high-interest loans could be in violation of state laws that prohibit unfair, deceptive acts and other fraudulent practices in the marketplace.
In addition, he said some states also have usury laws, which place a cap on the allowable interest rates a business may charge; however, he added, "those laws are seldom, if ever, enforced."
"They (service members) are absolutely under siege by these businesses," Tripoli said. He illustrated his point with a slide presentation that showed how various cash-advance stores, quick-cash lenders, and auto-title pawn shops had set up shop on the main road leading to Kings Bay Naval Submarine Base, Ga.
"How bad do service people fall for it? Certainly because they mismanage their money, in some cases," he said. "But that's not very hard to do when your salary is low and you're young and inexperienced," he added.
Tripoli said military personnel are "particularly vulnerable" to quick-cash lenders because of economics and demographics.
"Service people are attractive targets because they are younger, their paychecks are of a very stable source -- the U.S. government; They' re not about to be laid off and apparently are facing -- especially the younger ones - - more financial pressures early in life," he explained.
Meanwhile to get military personnel to borrow money, Tripoli noted that many lenders give their businesses names that sound military affiliated.
Those cited in the report include names such as Pioneer Military Lending, Veterans First Financial Service, American Military Debt Management Service and Armed Forces Loans. Tripoli said that such names tend to make people think these companies are catering to the military.