Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Nov 7, 2011

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A collection of consumer protection groups and advocates, including House Rep. John Campbell of California, are seeking to prohibit car dealers from preying on military personnel when administering new car loans and handling existing car loans.

While many of the scams that car dealerships use to prey on military personnel are the same used on basic consumers, this collection of consumer protection groups feel service members are particularly vulnerable.

Angela Martin, a military veteran who teaches financial readiness classes for military personnel, shed light in a recent press release published by Rep. Campbell on why this population is so vulnerable to auto loan scams:

  • Service members are a transient population by nature. They move often and wherever their work takes them. As a result, when an issue arises with a car dealer, they are unable to return to that same dealership to remedy the situation. Like a restaurant that gives poor service when its primary target is tourists, car dealerships know they can lack on service and integrity when administering car loans to customers who will not or cannot return.
  • Because service members move states so frequently, the Attorney General is less likely to assist members in pursuing legal action against a dealership that has wronged them since the case would likely deal with a party in another state.
  • Respect for and by authority figures is vital to a service member’s career, and car dealerships exploit that fact. When a service member falls behind on a car loan payment, some dealerships call the member’s commanding officer and request he demand payment from the member.
  • Service members’ loans can be paid directly by the military through use of the military’s “allotment” system. The allotment system distributes a member’s funds to other organizations before distributed to the member himself. Many dealerships require themselves to be set up to a member’s allotment system so that they get paid before the member even receives the cash.

Rosemary Shahan, an advocate who runs Consumers for Auto Safety and Reliability, says “dishonest cars-sales practices have become so severe that military deployment manuals list car financing as the most frequent obstacle to [service members’] financial readiness,” according to the release from Rep. Campbell.