When the economy gets tough and it’s hard to make ends meet, the lure of buying expensive items on credit (such as appliances and computers) is hard to resist. An entire industry has sprung up that’s great at separating service members from their hard earned cash.
Although not a scam, per se, there are many companies out there who loan money or sell products to service members with ‘easy credit.’ Companies such as USA Discounters, Freedom Furniture and Electronics, and Military Credit Services all sell furniture or appliances to service members with ruinous credit terms and, by exploiting a loophole in the federal Servicemembers Civil Relief Act (SCRA), if the service member falls behind on their payments, they can collect the moneys owed to them by taking the service member to court in Virginia – no matter where the purchase was made, or where the service member currently is.
In addition to marking the costs of the item up, many times to the point where you are paying twice as much for something as it is worth, these stores also tack on exorbitant interest charges and fees. If a soldier or sailor gets behind on their payments, they are immediately filed suit against. Since the suit is filed in Virginia, most service members don’t go to the court date. This results in an automatic win for the stores, and they are now in a position to garnish the service member’s wages to collect on the debt.
This cycle leads to the service members having even less money and feelings of powerlessness. Not only did they overpay for something, if they couldn’t keep up the payments, they are charged even more and the money taken out of their check with no input from them.
The lure of easy credit can be hard to resist when large expenses come up, and once the stores have gotten the service members inside, they push to sell them as much as they can. Whether the service member needs it or not, or even whether they can afford to buy the items, is not a consideration for these retailers. Their bottom line is money, and young service members, many away from home for the first time and making decent money, can quickly be overwhelmed and fall into debt that is nearly impossible to get out of.
The rent to own scam has been going on for years. It was popular when I was in the Navy and doesn’t seem to have declined since. It was probably popular for the men of Washington’s army during the winter at Valley Forge. For retailers, offering credit to military members means they will always collect the money that is owed them. For service members, it is a way to buy large items quickly. It is only when the true costs of your purchase become apparent that you realize you have been cheated.
Avoiding this scam would seem easy, and with the benefit of years of experience it is, but as a young sailor, I bought on credit from stores like this. Although I avoided any lasting repercussions, that was due more to having an older friend explain the error of my ways than any actions I was taking.
The lure of easy credit is hard to resist when these stores offer you what you need, when you need it. Instant gratification is an easy sell. Saving money for expensive purchases, or even buying used items until you have the money saved for those purchases avoids this trap, but many times, a service member has to find out for themselves how easy it is to get in over their head.
Disclaimer: The opinions expressed in this article are the opinion of the writer and do not reflect the policies of this website or organization.