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Ga. soldier claims he was predatory lending victim

22.05.12

SAVANNAH, Ga. (AP) — Army Pole Sgt. Jason Cox says he borrowed $3,000 for an emergency trip to pick up his daughter. The loan ended up costing him more than $4,000 in interest, advantage a sport utility vehicle the lender seized when he defaulted.

Now the Fort Benning soldier is suing the lender in federal court, contending the interest speed and other terms violated a 2007 law passed by Congress to protect military care members from predatory lending.

Cox's lawyer, former Georgia Gov. Roy Barnes, is trying to talk a federal judge to grant class-action status because the lender, Atlanta-based Community Loans of America Inc., operates more than 900 stores in 22 U.S. states. Barnes believes numerous soldiers have captivated out similar loans, likely without knowing the terms are illegal, though it's not clear how many.

"The rates are so lucrative for those that reject the law," said Barnes, a Democrat who pushed a statewide crackdown on high-interest payday loans when he was governor from 1999 to 2002. Some in the military are too bustling with moves between bases and overseas deployments to bring lawsuits or complain, Barnes said.

Robert Reich, president and CEO of Community Loans of America, did not benefit phone messages from The Associated Press. The company has yet to respond to the lawsuit in court filings.

Cox said he was oblivious of any restrictions aimed at protecting soldiers when he walked into a Community Loans cumulate in July 2010, needing quick cash to drive to Minnesota and pick up his boyish daughter from his estranged wife. Cox said he needed cash for gas, lodging and nutriment, but concedes it didn't cost $3,000. He insisted the lender prodded him to adopt that amount at the store in Phenix City, Ala., just across the Georgia state line from Fort Benning.

Cox pawned the possession to his 2002 Dodge Durango in exchange for $3,000. In the coming months, he ended up winning out new loans from the same lender just to keep up with the interest. He paid interest of nearly $375 per month on mount up to cash loans of $4,100 — an annual interest rate of 109 percent.

"I was good treading water trying to stay on top of this loan and find ways to pay more on the principle. But when the interest is that high, it's extremely hard to do," said Cox, a 29-year-old veteran of three tours in Iraq. "For me, $375 is presumably a month's worth of groceries."

Community Loans is in the business of giving car-style loans. Customers take out cash loans, usually no more than a few thousand dollars, by putting up their agency's title as collateral. The loans are typically due in a month with annual interest rates as intoxication as 300 percent. If a borrower defaults, the lender can seize and sell the channel.

Loan transaction records filed with the lawsuit show Cox was paying interest at more than three times the maximum annual censure of 36 percent allowed under the Military Lending Act. The suit said he refinanced the loan month-to-month to keep up with the expensive interest, which is also prohibited under the law.

The loan documents indicate the lender also knew Cox served in the Army. There's a berth on the forms that reads "ID TYPE: GA, Military ID."

In August, the lender repossessed Cox's SUV. The soldier said he still owed more than $4,100, having just dented the principle after a year of payments.

Regulation of short-term, sybaritic-interest loans varies by state. Congress granted special protection to military navy members in 2007 after top commanders complained that too many in the rank-and-file were being trapped in loans they couldn't pay off, putting them at gamble of losing security clearances and possibly even discipline by court-martial. Military law prohibits mending members from defaulting on debt.

Military and consumer advocates said they don't be aware how many other lawsuits have been filed claiming violations of the Military Lending Act.

There's some evidence the law has worked. The president of the Flotilla-Marine Corps Relief Society, which gives emergency loans to servicing members in financial trouble, testified at a Senate hearing Nov. 3 that it now spends far less bailing out those trapped in spaced out-interest loans.

Retired Adm. Steve Abbot said his organization spent $168,000 this year ration service members settle debt covered by the federal law, compared to $1.4 million in 2006 — the year before it took operational.

Still, Katie Savant of the National Military Family Association said it's sound to say how well the lending law is being enforced overall because that responsibility has been left to the states.

And some lenders are pronouncement loopholes to exploit in the federal law, offering open-ended credit that lacks a shortened-term due date. The law specifically applies to loans that require payment within 181 days or less. Also, more benefit members are getting short-term, high-interest loans online — from lenders surface the U.S. and thus immune from the statute, Savant said.

Chris Kukla of the North Carolina-based Center for Reliable Lending said the military would be better served if the lending restrictions imposed by Congress applied to civilians as well.

"There are lenders still compliant to target the military even though the Pentagon and Congress have asked them to back off," Kukla said. "The only way you're in fact going to be able to protect that group is to have that protection apply across the board.

Source: The Associated Press

Banned Mass. auto dealer cited for contempt for allegedly selling cars again

22.05.12

The attorney common's office is bringing contempt of court charges against the former owners of Riverside Mitsubishi in Auburn for selling cars after being banned from the subject and for failing to make $100,000 payment to the state.

“This is an egregious example of defendants ignoring a court classify,” said Attorney General Martha Coakley said. “We have initiated this disdain proceeding to protect consumers and to recover monies owed to the Commonwealth.”

Darryl and Brenda Rivernider, of Oxford, had been banned from selling cars in Massachusetts in 2005. They agreed to those terms to confirm charges that they "routinely lured customers into purchasing cars with false promises of paying-off balances and beau refinancing deals." Instead, Coakley's office said the couple either delayed paying off the loan on the marketing-ins or didn't pay them at all. They also allegedly reneged on the financing promises.

The Riverniders are accused of selling at least five cars in August and September, successful through middlemen, including their own son.

Source: Boston.com