Military Connection: DOD to Change Allotment Policy: By Debbie Gregory

Military allotments

Beginning January 1, 2015, the DOD is changing its policy on allotments.

For years, the Department of Defense (DOD) and the Defense Finance and Accounting Service (DFAS) have allowed service members to automatically redistribute their paychecks. Service members use the allotments to redirect funds to different accounts in order to pay their bills, before they have the opportunity to miss the money, or forget to pay their debt.

With the change on the 1st of the year, service members will no longer be able to use allotments to purchase, lease, or rent consumer items. The policy change will apply to any “tangible and movable” personal property, including cars, motorcycles, boats, furniture, laptops, tables, televisions, cellphones, appliances and more.

Other types of allotments will not be affected, such as those going to family members, savings accounts, to pay insurance premiums, mortgages or rent, charities and investments. The policy change will also not apply to military retirees or DOD civilian employees or to any current allotments that are in place to pay for items on credit.

Over the last several years, there have been an increasing number of documented abuses of the system by vendors. Service members were lured into purchasing items they couldn’t afford, using allotments in deals that often misrepresented the total cost of the item to the buyer.

While there are those who will blame the foolishness of the duped service members for the change, the fact is that there are too many unscrupulous companies out there looking to take advantage of people, especially service members. Because of their commitment to our country, many modifications and exceptions are made for service members, in order to make their lives easier and thank them for their service. Allotments are one of these modifications. Unfortunately, too many predatory companies have been using this modification to benefit themselves, with the men and women in uniform paying the price.

An interagency review of the allotment system revealed that three of the top ten allotment processors in fiscal 2012 were flagged by state law enforcement, consumer advocates and financial regulators as suspected abusers. Those companies received 999,588 allotments in 2012, totaling $1.4 billion.

Starting next year, when setting up an allotment, service members will have to certify that “Under penalty of the Uniform Code of Military Justice, I certify that this allotment is NOT for the purchase, lease, or rental of personal property or payment toward personal property.” Refusal to accept that certification will disallow the new allotment.

The new policy may seem like it will limit service members’ ability to afford items, and in truth, for some it will. But the change will give service members critical new protections against those who are intent on ripping them off.

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Military Connection: DOD to Change Allotment Policy: By Debbie Gregory