Military looking into payday lending system

CNJ Staff Photo: Andy DeLisle
Gina Ricketson, manager of A&A Title & Check Loan, left, and assistant Donna Fredrickson, right, try to get in touch with a client behind on payments. Ricketson said the military are the business’ best customers.

By Sharna Johnson: CNJ staff writer

Concerns over payday loans have military leaders looking for legal changes in the lending system.

Charles Brown, a former airman at Cannon Air Force Base, said he found himself in financial trouble when using payday loans became a vicious cycle in his life.
Brown entered the military with bills, and said he began to struggle under the weight of his debts. Recently separated from the Air Force, he turned to Clovis payday lenders to stay afloat.

“Once we got everything taken care of and paid off, things would be fine, and something would happen and there would not be enough money to cover something, so we’d do it again. It’s just a repetitive cycle that seems to never end,” he said.

The loans piled up and got to a point where there were too many of them, Brown said.

Slowly paying off the debts acquired during the past four years, Brown said, “Everybody says, hey, Friday’s payday. I say, yeah, it’s payday and I go to town (to repay the loan). I spend my whole check before I realize I’ve even gotten it. Where’s the reward in that?” he said.

As a result of stories like Brown’s, the Pentagon is backing an effort in Congress to slap a nationwide cap of 36 percent on payday loans to troops. An increasing number of states are taking steps, too, The Associated Press reported.

The Associated Press cited a Defense Department report released in August that estimated 225,000 service members — 17 percent of the military — use payday loans. The Center for Responsible Lending, a nonprofit group seeking stricter industry controls, says one in five service members took out such a loan in 2004, and that someone who borrows $325 pays an average of $800 in charges.

According to military officials, financial irresponsibility among active-duty personnel is a serious issue that can lead to punitive measures including dismissal. It can compromise security clearances and ability to be deployed, and is a major contributor to espionage, officials told The Associated Press.

Master Sgt. Keith Adams of the Component Maintenance Squadron at Cannon said payday lending is “pandemic (and) really preying on the younger troops and is causing pain and headaches to them, as well as to sergeants and commanders.”

A large part of Adams’ role as a master sergeant is managing airman under his command. He asserted the steady paychecks of active-duty military and the recourse lenders have through commanders, who can pressure members to pay their bills, make airmen targets for payday loan companies.

Gina Ricketson is frustrated by lawmaker efforts to limit payday loan interest rates. The manager of A & A Title and Check Loan in Clovis said not all payday lenders are out to gouge their customers.

“These people know exactly what they’re getting into,” she said. “When they get the loan, we give them information on the interest and payments. We’re in it to help the customer. It’s all about the customer. It’s not about the money — nobody sees that but the customers know that,” she said.

Ricketson estimates 70 percent of her customers are military — active-duty and retired military members walk through the door daily, she said. Ninety percent are repeat customers because they trust the relationship with her company, she said.
A lot of customers don’t have credit, have bad credit or are overextended, and need a small loan to help with real-life issues, Ricketson explained.

“I like our customers having the freedom to do what they want to do. A lot of them come to us because they don’t have good credit, and they couldn’t go to a bank. They come to me because they need money for medication, gas money for a week or money for food. What’s going to happen to them when you take away all these loan places? When you are on that fixed income, you don’t make enough money to live on,” she said, explaining many customers are young airmen or people on Social Security.

“They have to realize it is a high-interest loan, but if you pay it right, it’s not as bad as it seems. Anything they pay above the payment comes off the balance. Those who draw it out, that does make it hard.”

Loans range from $100 to $1,000, she said, with interest as high as 243 to 521.43 percent.

“It does sound outrageous when you look at it, but when the customer has control and they do it right, it’s not as bad — their balance will come down and the interest comes down with it. They have freedom on how long and how much. There’s no limit as to when you pay it off. Some places you can’t pay to the principal. We don’t do that,” she explained.

Ricketson said her company loves marketing toward Cannon airmen. “Some of the military are my best customers — and my most faithful paying, too,” she said.

— The Associated Press and Freedom Newspapers writer Janet Birkey contributed to this report.