MAC Archives

By Joe Silva

On April 20, 2015, the Consumer Financial Protection Bureau (CFPB) intervened against a creditor for charging hidden fees to service members.

The Fort Knox National Company and its subsidiary, Military Assistance Company (MAC), are alleged to have charged millions of dollars in hidden fees to service members over the course of several years.

Service members would set up allotment programs with MAC that would automatically transfer portions of their pay every payday into a pooled bank account that MAC controlled, and used to make automatic payments to creditors, including auto lenders and credit cards. For this service, MAC would charge monthly fees that were often between $3 and $5.

While this is a convenience for service members, MAC was alleged to have, on several occasions, continued to collect funds from a service member’s pay, even after a debt had been paid off. These excess funds collected into a residual balance that MAC would charge hidden fees against. These fees would slowly drain the service members’ bank accounts, many times without them noticing for several months.

As a Veteran, I can speak with the voice of some experience in this matter. I set up automatic payments during my time in the Navy, but was burned on my first deployment when I wasn’t paying attention to these accounts. During that deployment, one of my debts had been bought out by another major bank, and my automatic payments stopped going through, early into my deployment. I was welcomed home by six months-worth of unpaid bills. For my next two deployments, I kept better track of my finances (as much as I could), and I also gave my mother Limited Power of Attorney over my finances, to make sure that she could act on my behalf while I was deployed. I suggest that all service members look into appointing a spouse, parent or someone they absolutely trust with some form of power of attorney while they are deployed. To find out more about Power of Attorney Basics, please visit www.militaryonesource.mil or see your command’s career counselor or admin department.

The CFPB alleges that between 2010 and 2014, MAC charged tens of thousands of service members with hidden fees of $100 or more, totaling over $3 million. The bureau alleges that MAC and Fort Knox National Company failed to clearly disclose key information about costs to their consumers, and failed to notify service members that it had charged fees.

The Fort Knox National Company and MAC have been ordered by the CFPB to provide $3.1 million in relief to the service members they overcharged. The Consent Order can be viewed at consumerfinance.gov.

Military service members volunteer and swear an oath to stand up for their country and protect it. For their dedication and sacrifice, many Americans are grateful to them. But unfortunately, there are many people who take advantage of service members. It is refreshing to see government agencies reciprocating the support of service members, and having their backs as well.

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