Description of scams commonly aimed at the military

Automobile-related scams: Cars are a big source of financial trouble for service people. The Navy-Marine Corps Relief Society, for instance, gives the largest single portion of its cash aid to military families—nearly a quarter of all its aid—for car-repair assistance. Three big auto-related scams aimed at the military area:

“Title Pawn” lending: This goes on in a number of states and has been sharply limited in a few. It’s a form of short-term lending where instant cash loans—usually for no more than a quarter of the car’s value—use the car’s title as collateral. Interest rates are usually very high, and there are many cases of cars being lost to lenders for what amounts to a fraction of their value.

“Buy Here/Pay Here” used car dealers: Lynn Drysdale of Florida Legal Services describes typical operations in her region this way: “These dealers finance usually rather old used cars with a large down payment—often equal to the car’s value—then put the customer on a bi-weekly payment plan for ‘the rest.’ The car breaks down, the payments stop, they repossess the vehicle and sell it again. They’re just churning cars, basically.”

“Spot delivery” or “yo-yo sales”: A form of bait-and-switch. Several sources describe these fundamentals: Buyer buys car, signs financing agreement, and drives the new purchase away. The dealer calls later and says buyer’s credit has not been approved, and in order to keep the car, the buyer will have to agree to either a higher interest rate, a larger down-payment, or both. If a trade-in was involved the buyer is often told the tade-in has already been sold and is not recoverable. Dealer then offers the option of buyer’s losing the value of the trade-in if he or she wants to keep the remaining terms of the original deal.

The joint command of the San Diego/Orange County-area bases in California is among those that have placed businesses charging super-high fees for good or services “off limits” to military personnel.

Footnotes:

Military Legal Assistance officials in the San Diego region told the National Consumer Law Center that high-priced used car sales are “the single largest consumer (contract) problem that we see here in Legal Assistance.”

Ray Meaux, a former financial counselor at military bases in South Carolina and Georgia, says his investigation of one “buy here/pay here” dealer in Charleston, South Carolina, showed the dealer had sold the same car 18 times!

 

read the full report:
http://www.consumerlaw.org/initiatives/military/content/report_military.pdf

 

go back to military article headings