”You will never find a more wretched hive of scum and villainy. We must be cautious." That is what Obi-Wan Kenobi said to Luke Skywalker upon arriving at the Mos Eisley spaceport on Tatooine. It could easily be any first sergeant talking to his soldiers about the strip just outside the front gate just off post.
Every military base has one, in my case at Ft. Campbell, Kentucky, it was U.S. Highway 41A from I-24 all the way into Clarksville, Tennessee. Thirteen miles of every establishment known to mankind that is dedicated to separating a Screaming Eagle from his/her paycheck. Bars, topless bars, all nude bars, used car dealerships, new car dealerships, pawn shops, rent-to-own shops, electronics stores, more used car dealerships, tattoo parlors, and yet more pawn shops—all of them, except for the assorted bars offer “EZ Credit” to service members.
When I was young, dumb, and a brand-spankin’-new 21-year-old corporal in 1988, one of the used car dealerships had a sweet bright orange metallic 1966 Ford Mustang on the lot. I may have caused an accident getting across 41A to look at that sweet ride. The banner above the lot said EZ credit to Ft. Campbell Soldiers, the sales person looked like Kurt Russell in the movie Used Cars, plaid suit and all. But I did not care—all I saw was my dream car. He was talking up a storm about how he could get me into that car for about $200 a month. I popped the hood, and thank the great noodley one that I did, the car had 289 badging on it, but that was no V8 in the car, it was a straight six.
In the mean time, the salesman had already taken my info to run a credit check, and had given me paperwork that I thankfully had not signed. I would have been required to purchase the dealership’s gap insurance, the interest rate for the loan was somewhere north of 40 percent, and would have required me to have payments via an allotment from my paycheck. I walked away from that “deal” a little wiser, and I never stopped at a car dealership on the strip after that.
The question is why are all these disreputable businesses around U.S. military bases? The answer is pretty simple. Soldiers are good credit risks. If PFC Snuffy Smith buys a $40,000 Mustang, and misses a payment, the bill collector is not going to go to PFC Smith—he is going to PFC Smith’s chain of command. Next thing you know PFC Smith is suckin’ mess hall food down on Saturday afternoon when he is off duty, and hanging out in the dayroom on Saturday night because he cannot afford to go out because he was forced to sign an allotment to make his car payment, because if he misses a payment, he becomes PV2 Smith, and will have even less money to make that car payment.
None of this is new to the U.S. Military, there have always been camp followers, with the first type of camp follower being families, while the second type, is a bit more nefarious. ...
...the second type of camp followers have historically been informal army service providers, servicing the needs of encamped soldiers, in particular selling goods or services that the military does not supply—these have included cooking, laundering, liquor, nursing, sexual services and sutlery.
To give you an idea of some modern-day camp followers, my first experience with them was while on Reforger, in 1987 in Germany. We kept seeing vans alongside the roads, sometimes one or two women would be out in front of them, or you would see a military vehicle parked next to one—sometimes, even an M1A1 Abrams tank. All of 19 or 20 years old I asked one the NCOs in my platoon about them—they were prostitutes, i.e. camp followers providing services to soldiers. (No, I did not use these services—what little downtime I had was spent eating, and sleeping.) Whenever the troops would move, they would follow and set up nearby. It was all about separating the soldier from his money.
At this point you are probably wondering why in the hell I am talking about camp followers. Well, the current administration has decided to screw the troops over once again in favor of camp followers. This has been a banner week for the current White House resident and his “support” of the troops—first he tells them that they are not patriotic because they would not turn down a pay raise … which he also lied about it being the biggest raise in ten years for the military.
On top of that—what protections there are for service members are being rolled back in the name of greed.
NPR has obtained documents that show the White House is proposing changes that critics say would leave service members vulnerable to getting ripped off when they buy cars. Separately, the administration is taking broader steps to roll back enforcement of the Military Lending Act.
The Military Lending Act stopped a lot of abuses toward military members.
[T]he Military Lending Act imposes a 36% rate cap on tax refund loans and certain payday and auto title loans made to active duty armed forces members and their covered dependents, and prohibits certain terms in such loans.
The CFPB has issued several enforcement actions against payday lenders for reasons such as violating the prohibition on lending to military members and aggressive collection tactics.
A more comprehensive view of the Military Lending Act states:
The Military Lending Act (MLA) says that you can’t be charged an interest rate higher than 36% on most types of consumer loans and provides other significant rights.
The MLA applies to active-duty servicemembers (including those on active Guard or active Reserve duty) and covered dependents.
Your rights under the MLA include:
- a 36% interest cap. You can’t be charged more than a 36% Military Annual Percentage Rate (MAPR), which includes the following costs in calculating your interest rate (with some exceptions):
- finance charges,
- credit insurance premiums or fees,
- add-on products sold in connection with the credit, and
- other fees like application or participation fees, with some exceptions.
Note: Credit card companies dont have to comply with the MLA until October 3, 2017. It’s possible that some of their common fees, like cash advance fees and foreign transaction fees, won’t be included in the overall MAPR calculation.
- No mandatory waivers of consumer protection laws. A creditor cant require you to submit to mandatory arbitration or give up certain rights you have under State or Federal laws like the Servicemembers Civil Relief Act.
- No mandatory allotments. A creditor can’t require you to create a voluntary military allotment in order to get the loan. An allotment is an automatic amount of money taken from your paycheck to pay back your loan.
- No prepayment penalty. A creditor can’t charge a penalty if you pay back part or all of the loan early.
What rule is being proposed for change? Well, it is the one that would help out used car dealers the most. It would allow them to sell gap insurance again. We have gap insurance on my son’s car, it cost about two dollars a month through our regular insurance company. Through a dealership on the strip outside of the main gate:
"But if you buy it from your car dealer, they may mark it up. ... I've seen gap insurance policies being sold for $1,500" over the course of the loan, [Christopher Peterson, a law professor at the University of Utah] says.
This is likely just the first change to the Military Lending Act. If I learned anything in the Army it was that I was prey, and all those shady businesses on U.S. 41A were predators. They only thing they existed to do was to separate me from my paycheck with their “EZ Credit.” They are still there today, ripping off single troops, married troops, dependents, and anyone else who stumbles into their web. Weakening this law only hurts our service members, and boosts the profits of predators.