Military Connection: Creditors Ordered to Repay $3M to Service Members


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 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

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.

Military Connection proudly serves those who serve in the Army, Navy, Air Force, Marines, Coast Guard, Guard and Reserve, Veterans and their Families. We are the go to site for Veteran Employment and information on Veteran education. provides Veterans with and Directory of Employers, a Job Board, information on the Post-9/11 GI Bill, and a blog that offers Veterans boundless information. Be sure to visit, the go to site.

Military Connection: Creditors Ordered to Repay $3M to Service Members: By Joe Silva

Military Connection: Be Alert for Predatory Payday Loans

Payday Loans
Most military installations across the country have a few local businesses in the area. Restaurants, hotels, dry cleaners and barber shops are just a few of the staple businesses that are usually found within walking distance of the gates. But there are other industries that have popped up over the years, just outside of military installations, that can be beneficial to military personnel, but also have the potential to harm service members. Among the biggest offenders are payday lenders.
It goes without saying that not every payday lender is out to swindle people. The more reputable establishments should appreciate this article, because it could increase their business from people who don’t want to be cheated by the less trustworthy lenders.
Payday loans can be a very useful service for when life happens, and it happens to us all. Payday and deposit advance loans do provide an important alternative to credit card debt and bank loans. But the truth of the matter is that payday lenders are frequently using new loan products to prey on service members and military families. Deposit advance loans typically offer service members the ability to cash their military paychecks a week or more before they typically would be able to access the funds. In exchange, companies take a fee when the paycheck arrives, and pile on other penalties if the check doesn’t cover the outstanding balance.
Researchers from the Consumer Financial Protection Bureau found that more than 12,000 military families used some form of deposit advance product from 2012 to 2013. Years ago, federal regulations were put in place to cap the annual interest payments on short-term loans to military members at 36%. But lenders have found ways over, around and under these regulations, and many of today’s loans are not covered under any previous regulations passed by Congress. Believe it or not, some of these loans can carry annual interest rates in excess of 300%! Under current rules, certain loans of more than $2,000, or ones with terms longer than 180 days, are not regulated.
These high rates and short loan timeframes often lead to compounding debt that can financially devastate a service member or military family. Poor credit, defaulted loans and other impacts often caused by payday loans can cause serious harm to a service member’s career. Security clearances can be revoked or denied due to defaults and low credit scores. Also, often times, when a loan is defaulted, the lender will contact the service member’s chain of command, which can also have a negative effect.
The DOD has already proposed broadening some of the military loan regulations, including extending the interest rate caps to any payday loan or auto title loan, regardless of their amount or duration.
It is a shame that anyone would target and prey on service members. But just like when in combat, service members need to do their part to not make themselves targets. This includes avoiding taking out any unnecessary loans or lines of credit. It is highly recommended that service members and military families use their earnings wisely. If you must use a payday loan, shop around and choose a lender that will work within the federally approved 36% annual interest rate.
Military Connection proudly serves those who serve in the ArmyNavyAir ForceMarinesCoast Guard,Guard and ReserveVeterans and their Families. We are the go to site for Veteran Employment and information on Veteran education. provides Veterans with and Directory of Employers, a Job Boardinformation on the Post-9/11 GI Bill, and a blog that offers Veterans boundless information. Be sure to visit, the go to site.