August 10, 2005
Media Contact: Sandi Copes
Phone: (850) 245-0150
Crist, Military Advocates Announce Alternative To Payday Loans
Jacksonville – Attorney General Charlie Crist joined with several military organizations and advocates to spotlight the availability of an alternative to costly financial arrangements known as payday loans. Joining the Attorney General at the Jacksonville Naval Air Station was Ronald Duchin, Executive Director of the Concerned Veterans Communications Coalition; Captain Dave Feraldo, Director of the Navy/Marine Corps Relief Society; Assistant Professor of Law Christopher Peterson of the University of Florida along with other military advocates.
The Attorney General and those in attendance announced that the Navy/Marine Corps Relief Society and their counterparts serving the other branches are providing zero percent interest loans to assist servicemen and women in their efforts to get out of debt. Zero percent loans are also available for those with emergency financial needs.
Each week, servicemen and women and their families – trying to make ends meet – are targeted for loans with exorbitant fees making it difficult, and sometimes impossible, to get out of debt. These loans, carrying actual interest rates of at least 100% according to the Navy/Marine Relief Society, keep military members literally living from paycheck to paycheck. The practice of payday loans centers on advancing a serviceman or woman a portion or all of the amount of their upcoming salary. These loans normally require repayment at high rates within a short period of time. It is often impossible to repay the loan within a few days because most military installations pay on a twice monthly basis. Despite this, the interest continues to effectively increase and the serviceman or woman is further behind by the next payday than they were prior to obtaining the loan.
Dependance on these types of loans has become a sufficient enough concern to prompt the U.S. Department of Defense to determine that the astronomical rates charged by some have an impact on "military readiness." The debt resulting from these loans places a service member at risk of losing their security clearance, or worst case, being discharged from the military.
"Zero interest loans are a godsend and a financial lifeline for military families," said Crist. "Thankfully there are organizations who care about the well-being of those who give so much to our country." Attorney General Crist urged the Florida Legislature to take a close look at the statutes to ensure that the men and women in uniform are being protected. Current Florida law allows an effective annual percentage rate of 390%. Some states have no statutory limits on payday loans.
On June 30, the Attorney General issued a consumer alert to military families advising them to avoid "predatory lenders" and offered tips on how to avoid becoming involved with them. The alert also revealed another option for military families – the Servicemembers Civil Relief Act – which entitles personnel on active duty to more favorable loan repayment requirements.
However, these protections are available only for loans received by personnel prior to the time they are called to active duty. Today’s announcement of zero percent interest loans further expands coverage to more members of the military.
The June 30 alert also stated that certain payday loan providers were under investigation for possible illegal activity. The investigation is ongoing.