The Routine Bilking of Soldiers

Fort Campbell, on the Kentucky/Tennessee border, is home to the 101st Airborne Division. “Go out Gate 5 at Fort Campbell and Jenna’s Adult Superstore is right across the street.” So begins Ron Lieber’s tour through the town outside the base, which ran in the Times business section June 30.

“Turn left and there’s a casino. Turn right and there are miles of businesses catering to — or preying on — financially inexperienced soldiers with money in their pockets for the first time… There are used car lots galore and Cash America Pawn. Then, Omni Military Loans, various check-cashers and a storefront that invites soldiers to sell their plasma. On it goes along the main thoroughfare named for the Army post — the center of an ecosystem that thrives on government paychecks and not knowing how to manage them.”

Back in the ’60s, peaceniks hoping for a dialog with soldiers set up coffeehouses near Army towns. The equivalent today might be storefronts that offer help dealing with predatory loans.

Like most military bases, Fort Campbell isn’t adjacent to a city offering interesting R&R. Nashville beckons, but it’s more than 60 miles away –$60 and two-and-a-half hours by bus. As Lieber puts it, “having a life requires having a car…Whether their tastes skew toward hulking trucks, sleek imports or American muscle, soldiers at Fort Campbell don’t want for choice.

“There are at least three ways to finance a car around these parts, from most desperate to least desperate: a buy-here-pay-here loan, in which the dealer takes all the risk (and does the repossessions); a sort of dealer-run installment plan; and a third-party loan obtained through the dealership.

Although the Army offers financial counseling, many soldiers don’t avail themselves of it because there’s “a culture of self-sufficiency” and describing your plight might pose “a threat to military career prospects….Several soldiers convinced themselves that even inquiring about a loan could lead to a superior’s finding out about their problem —and any errors in judgment that led up to it.”

According to Lieber, “the Consumer Financial Protection Bureau in 2016 accused Navy Federal employees of falsely threatening to alert service members’ commanders about past-due debts. That year, Navy Federal paid $23 million in compensation to consumers in addition to a $5.5 million civil penalty.” (Navy Federal is a lending company that employees many veterans and spouses of active service members.)

“The credit union’s threats were not empty: Security clearances are often required for work that even relatively young soldiers do.”

Soldiers also borrow to buy bling. A national chain, Harris Jewelers, was sued by the Tennessee Attorney General in 2020 for unlawfully claiming that customers could improve their credit rating by adding new debt.

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“The federal Military Lending Act caps the interest that a lender can charge an active-duty soldier at 36 percent annually.

“Military compensation starts at $1,695 per month in basic pay, before any other allowances.

“On a flier that all the new arrivals receive — the Fort Campbell Help Flow Chart — food assistance and financial assistance are two of the 11 categories, alongside abuse and addiction.

“A few miles south of Fort Campbell’s gates, Nicole Allen was working the front desk at Grifols Biomat USA Plasma Center, which had a ‘Welcome Home Troops’ sign over the entry. About 20 percent of the people who come in to sell that part of their blood are enlisted men and women, she said. New donors can earn up to $1,100 in their first month.”

Long before automatic payments from your bank account were common, the Defense Department allowed companies like Omni Military Loans to arrange regular allotments from soldiers’ paychecks. Omni routinely insisted on payment by allotment; they were stopped from doing so by court order in 2020