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Warning issued on 'military only' private businesses

Nov. 22, 2013 - 01:40PM   |  
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A New York assistant attorney general warns service members to look closely at businesses that sell products only to service members.

Deanna Nelson, New York’s attorney for the Watertown region that includes Fort Drum, told a Senate committee this week that her office is “very sensitive to the fact that soldiers are different and more vulnerable than most other consumers.”

Service members are targeted, she said, because “they have paychecks, they will repay their debts and they won’t complain.”

Testifying before the Senate Commerce, Science and Transportation Committee, which is considering new rules on money lending to military members, Nelson said her experience shows that the business model for some companies is entirely focused on getting service members as customers, not on what they actually sell.

An example, she said, was a business set up in a Watertown mall to sell computers. “The business was unwilling to sell its wares to anyone other than the military and refused any payment other than by allotment,” Nelson said.

“When our office sent in a non-military staff member to explore purchasing from this business, she was directed to Walmart,” Nelson said.

The business did not even have a cash register or credit card readers, she said, only a stack of finance agreements already filled out.

Nelson said she suspects, but never proved, that the computers being sold to soldiers were purchased at Walmart or some other local store. The company made money, she said, by tacking on fees that were not disclosed because the full retail value of the product was never provided to the customer.

In one case, she said, “There was no way out of the contract even if a soldier wanted to return the product within a short return period. There was a very expensive restocking fee.”

She suggests that service members be wary of where they shop, and recognize that the contract they are signing may have many hidden fees.

Nelson also believes it might be time for the Defense Department to reconsider its allotment policy that allows businesses to tap directly into troops’ paychecks to ensure payment. “What once was efficacious may not be simply a tool of abuse,” she said.

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