Scamming our Troops

It is pretty hard for me to wrap my brain around the fact that there are people scamming the brave men and women that fight for our freedom everyday.

Its bad enough that we hear about these low lifes taking money from unsuspecting consumers, but to do this to the very people that fight to give them the right to run despicable businesses just makes me sick.

Red, White, and Scammed

The used BMW was pretty, its silver paint gleaming, and the $17,000 price was reasonable. So, in March 2007, U.S. Army Spc. Diann Traina signed a contract, took out a loan, and traded in her pickup to buy the sedan at a dealership in Fayetteville, N.C., right outside the gates of Fort Bragg.

What she didn’t know was that the dealer had taken out a loan against his inventory and didn’t actually own the vehicle he sold her. Spc. Traina was never able to get the title to the BMW, so when the dealership shut down soon afterward, she was stuck—without a car and with an $11,000 debt. In the meantime, she had been deployed to Iraq, leaving her helpless to do much about it.

Like thousands of service members engaged in fighting America’s battles overseas, Spc. Traina had encountered a foe here at home. Young, inexperienced, and often drawing their first paychecks, enlisted men and women are easy marks for sleazy car dealers, insurance scammers, predatory lenders, and identity thieves. So pervasive are the rip-offs—and so troubling the debt incurred by military personnel as a result—that U.S. Department of Defense officials recently labeled the situation a threat to national security. “You don’t want them distracted while they’re out on the front lines,” says Clifford L. Stanley, undersecretary of defense for personnel and readiness. “But they will be if they’re worrying about what’s going on at home.”

Dwain Alexander II, a civilian lawyer for the Navy in Norfolk, Va., seconds the opinion. “If you’re sitting at the helm of a multibillion-dollar vessel and you’re worried about whether your wife can stay in the place you’re renting, you’re not fully focused on what you’re doing. Incremental mistakes can lead to catastrophic endings.”

America’s soldiers, sailors, airmen, and marines have guaranteed paychecks and won’t ever get laid off. These factors make them good credit risks. It also makes them targets. “There are a lot of people who see service members as cash cows,” says Holly Petraeus, director of the military program of the Better Business Bureau (BBB) and wife of Army Gen. David Petraeus, whom President Obama recently named to serve as commander of U.S. and NATO forces in Afghanistan. “Go to any city with a big military installation, and there’s a cluster outside the gates—Fast Freddy’s auto loans, pawn shops, check cashers.” The daughter of a four-star general, Petraeus advocates for service members and their families and works with BBB affiliates to provide troops with financial education.

A recruit typically earns less than $1800 a month, and too often these modest paychecks are carved to bits by bad deals. According to Navy lawyers, a computer store outside the Great Lakes Naval Training Center in Illinois employed attractive women to troll for new sailors. Once inside, the recruits were pressured into buying bare-bones laptop computers—for more than $4000. (The store has since closed.)

Life-insurance scams are another scourge. When John Oxendine, Georgia’s insurance commissioner, learned that soldiers at Fort Benning had been sold “extremely overpriced” or misrepresented policies before shipping off to the Middle East, he helped launch a multistate investigation. The probe has spurred companies to offer $70 million in refunds to thousands of service members. “What you’re basically seeing is war profiteering,” Oxendine says. “These are people who are putting their lives on the line for us. We owe them.”

Washington has waged war against the scammers with limited success. When a 2006 Defense Department report cited payday lenders as a threat—rates for short-term loans had soared as high as 780%—Congress passed an amendment to the Defense Authorization Act of 2007 that capped rates on such loans to military personnel at 36%. “Many payday-loan businesses stopped lending to service members,” Petraeus says, “because they said they couldn’t make a profit.”

Read the rest of the story here.