A bill was approved in Congress last week targeting predatory lenders that one local Congressman described as an "acute" problem in San Diego County.
U.S. Rep. Scott Peters, D-52 District said so-called predatory lenders are using loopholes in existing laws to trap members of the military in a circle of debt.
“Sadly, it’s become clear the nature of military services makes our men and women in uniform the ideal targets for predatory loans that carry exorbitant interest rates,” Peters said Thursday.
This is a big issue here in San Diego and adding new language to the Small Business Regulatory Flexibility Improvements Act of 2015 is another way the government is trying to stop people who scam military members.
According to experts, military members are a giant target in the marketplace.
“Furniture, electronic place, car parts, rims, car dealerships,” says Ed Olander a Personal Financial Counselor with the Navy. “First off they're young, the average age in our Service is 19, they're away from home they are getting a pay check a fairly good paycheck.”
A paycheck from the U.S. military basically means mandatory payment.
Morgan McCorkle runs Personal Financial Management at Miramar.
“Those haircuts, while I love them, that's a pretty big give-away if I am walking into a business to get a
loan or buy a product on credit,” McCorkle said.
“The creditors know that that person has to have on time payments or it's going to show up on the report and get back to the command,” she says.
She and Olander have seen it all.
"I've seen APR's as high as over 500% for somebody, which is absolutely completely legal because it was set up as a revolving line of credit on line lender,” McCorkle said.
While there are laws like the Military Lending Act to protect the military from predatory lending they say as soon as the law comes out some businesses find a way to work around them.
“It is financial wack-a-mole,"Olander said. "We nail one down and another one pops up."
USMC officials say financial stability of Marines is considered a readiness issue.
Military personnel can actually lose a job or their orders if they get into too much debt, McCorkle added.
She said that's one reason why financial classes are mandatory for the Navy and Marine Corps. There is free counseling, legal services, and other financial advice available on base.
One of those events is scheduled for February 24 from 5 to 7 p.m. at 3200 Santo Road. There will also be activities for the kids.