OAK GROVE, Ky. — Go out Gate 5 at Fort Campbell and Jenna’s Adult Superstore is right across the street. On either side are easy ways to lose your shirt.
Turn left and there’s a casino. Turn right and there are miles of businesses catering to — or preying on — financially inexperienced soldiers with money in their pockets for the first time.
The wide boulevard along Fort Campbell’s front wall is lined with places to get into debt or worse. There are used car lots galore and Cash America Pawn. Then, Omni Military Loans, various check-cashers and a storefront that invites soldiers to sell their plasma. On it goes along the main thoroughfare named for the Army post — the center of an ecosystem that thrives on government paychecks and not knowing how to manage them.
For soldiers sometimes still in their teens, the dozens of financial services operators that surround Fort Campbell and other military outposts are a gantlet to run every time they step off government property. The results are alarming: The post’s own newspaper reported that in recent years, 40 percent of its soldiers had at least one predatory loan. Often, they owe the loans to business owners who were once in the military themselves.
The Department of Defense, regulators and elected officials are well aware of the perils. Financially troubled soldiers may not be at their best, and money problems can cost them security clearances that are crucial to their jobs. So for decades, the government has fought to fend off cheaters, charlatans and others who wish to get their claws into military paychecks.
And while there have been victories, many continue to thrive.
Watchdogs are deeply concerned. This month, the Consumer Financial Protection Bureau issued a warning about so-called allotments, a system that allows lenders to siphon money directly from soldiers’ paychecks. It also published a report noting that service member complaints rose 19 percent from 2019 to 2021, the majority of them related to debt collection and the credit reporting that tracks those debts.
With prices rising for almost everything, including cars and food and gas, the opportunities for lenders to profit from military personnel have only grown. And such customers are becoming even more enticing as branches of the armed forces increase sign-up bonuses to better attract recruits.
Attempts to address the problem run into one unavoidable obstacle: Young and financially inexperienced members of the military are ideal clients. They are not highly paid, but their jobs are all but guaranteed — so their paychecks arrive like clockwork.
The driver’s seat and the road to ruin
Fort Campbell straddles the Kentucky-Tennessee border near Oak Grove, Ky., and is home to the 101st Airborne Division, a unit renowned for its service from the beaches of Normandy to the streets of Falluja. Just under 30,000 soldiers are stationed there.
It’s not just the businesses lining Fort Campbell Boulevard that can imperil a soldier’s finances, it’s using the road at all. Just under half of U.S. soldiers are 25 or younger, and many are at outposts like Fort Campbell, where having a life requires having a car — a major purchase that they often pursue without much guidance.
“I was like, ‘Man, I don’t need my parents,’” said Jhett Florip, who joined the Army right out of high school about an hour north of Chicago. “I was out on my own, doing my own thing.”
He found a dealer who sold him a used Ford Escape — and set him up with a loan that had an extremely high interest rate. Between the payment and insurance costs associated with being a young male driver, Mr. Florip was soon spending a significant portion of his take-home pay on the vehicle alone.
He eventually found his way to Navy Federal Credit Union, the country’s largest credit union. The deal wasn’t much better there; he refinanced the loan for a few percentage points of savings.
“They explained to me: You’re a new person to our company buying a car with a big loan. You don’t have credit history,” he said. “So we’re going to jack it up.”
Mr. Florip’s mother ultimately set him straight: You can refinance without changing lenders, she told him. He eventually went back to Navy Federal and qualified for a much better rate.
Now Mr. Florip sees many soldiers doing exactly what he did when they see a vehicle that catches their eye.
“I’d call it a rite of passage, and I’d also just call it being naïve,” he said. “The first offer they get for the car they want is the best offer, and they just want to get it done.”
Buy now, and pay for it later
Whether their tastes skew toward hulking trucks, sleek imports or American muscle, soldiers at Fort Campbell don’t want for choice. And their buying experience can vary just as widely.
There are at least three ways to finance a car around these parts, from most desperate to least desperate: a buy-here-pay-here loan, in which the dealer takes all the risk (and does the repossessions); a sort of dealer-run installment plan; and a third-party loan obtained through the dealership.
At Nash Auto Sales, there’s no credit check — not that many of its customers would pass one — and high interest rates reflect its highly risky clientele. At BW’s Preowned Autos, across the boulevard from the post, cars come with two prices, one for cash and a higher one for a 12- to 18-month payment plan.
Adopt an Auto is the third kind, where soldiers’ information is plugged into a computer that spits out offers from willing lenders.
BW’s and Nash are both owned by military veterans, and until recently Vicky Salesky, who runs Adopt an Auto, had a partner who was a veteran.
Ms. Salesky said she tried to be one of the good guys, talking sense into younger soldiers who might qualify — just barely — for a loan with a double-digit interest rate. Many of the soldiers who come in are only a little older than her three teenagers.
“I hope they’re listening to me,” she said.
The veteran voice of experience
Terrence Jones hopes they’re listening, too.
An Army veteran himself, Mr. Jones once had to reassemble his own finances. Now he’s one of a group of financial counselors at Fort Campbell, doing standard-issue training, plus frequent one-on-one sessions that are both preventive and restorative.
His colleague Loreta Guzman said many of the soldiers who came in for advice were teenage novices. But other new enlistees are in their 30s.
“Maybe they couldn’t make it outside of the military, or they needed health care or housing,” she said. “They’re clueless. They don’t know where to start.”
Mr. Jones can tell the soldiers that he has been in their shoes.
“I got comfortable going to loan companies,” he said. “I was in a hole so deep, the daytime was dark. They say you cannot borrow your way to success, but I felt like I could prove them wrong.”
Now a kindly grandfather with a necktie and hair twists, he preaches a mantra: Financial literacy is not a skill, it’s a lifestyle.
Soldiers had best recite it daily. Mr. Jones once counted 31 storefronts nearby where inopportune financial choices were available to all.
A dynamic that breeds secrecy
Too often, those poor choices can fester in silence, thanks to a culture of self-sufficiency and the threat they pose to military career prospects.
Navy Federal, despite its name, is open to all branches of the military. Plenty of veterans and spouses of active service members work there — and its intimacy with the armed forces has been used for good and ill.
Navy Federal’s employees understand how its customers live and work — and some knew the frightening forms of leverage that exist in the military.
The Consumer Financial Protection Bureau in 2016 accused Navy Federal employees of falsely threatening to alert service members’ commanders about past-due debts. That year, Navy Federal paid $23 million in compensation to consumers in addition to a $5.5 million civil penalty. (A Navy Federal spokeswoman said the lender had made “necessary changes” in response to the regulatory action.)
The credit union’s threats were not empty: Security clearances are often required for work that even relatively young soldiers do.
“In the military, there is very strong pressure to say, ‘Yes, I’m OK, don’t worry about me,’” said Clay Stackhouse, regional outreach manager at Navy Federal who was a Marine Corps aviator and rose to the rank of colonel. “I thought, ‘I got this.’ Lord knows I wasn’t going to tell anyone about my finances.”
That can make it easy for scams of all sorts to proliferate. In 2020, the Tennessee attorney general blew the whistle on a move that a national chain, Harris Jewelers, was pulling repeatedly at the local mall.
According to the attorney general’s office, Harris’s stores were “strategically located near military installations” and urged members of the military to borrow for its high-priced baubles. A bonus, according to the jeweler’s pitch, was that customers would be building or repairing their credit with the new debt, an arrangement that the state called “unlawful.”
“There’s money to be made,” Mr. Stackhouse said. “And we’re dealing with young people who have money for the first time.”
Fortunately, certain kinds of businesses don’t bother trying to pitch their wares to soldiers now. The federal Military Lending Act caps the interest that a lender can charge an active-duty soldier at 36 percent annually.
To civilians paying 6 percent on a mortgage and 18 on a credit card, that’s shocking. But payday lenders and others say even 36 percent is essentially uneconomical, given the risk profile of their customers.
As a result, payday, pawn and car title lenders that line Fort Campbell Boulevard have a policy of steering clear of military families.
Stay humble and hustle hard
But that doesn’t mean those families don’t seek these businesses out anyhow.
When Ashley Larson arrived in town, she was neither a soldier nor a spouse — but she was young and financially vulnerable.
Ms. Larson moved to the area to be with her boyfriend, an enlisted soldier she has since married. She was the victim of financial abuse when, she said, someone wrote bad checks against her bank account, which blacklisted her from many banking services.
That meant turning to a check-cashing operation not long after arriving in town, which took a chunk of money in return for doing business with her. “I’m still trying to navigate the process of not looking like I robbed a bank,” she said.
True to the “Stay Humble, Hustle Hard” tattoo on her forearm, she filled many hours when she first arrived with part-time micro businesses like selling baked goods to other military families. She had relatives in Florida ship her guava for her tres leches cake.
“My husband is working 70 hours a week, and I’m basically doing a bake sale,” she said.
Only recently did she find a reasonably well-paying job. It’s out of state, so her mother-in-law comes to watch the children during the week. Local help, she said, is expensive.
‘Soldiers helping soldiers,’ if they ask
Army pay doesn’t go very far. Military compensation starts at $1,695 per month in basic pay, before any other allowances.
So on a flier that all the new arrivals receive — the Fort Campbell Help Flow Chart — food assistance and financial assistance are two of the 11 categories, alongside abuse and addiction.
The seven entries under financial assistance include Army Emergency Relief, a nonprofit closely affiliated with the military that bills itself as “soldiers helping soldiers.” It’s a lifeline: The fund helped nearly 26,000 soldiers last year, handing out $44.8 million in loans and grants.
At Fort Campbell, officials there said, soldiers often sought assistance with getting a new place — first and last month’s rent — or with car repairs.
Although a commander need not be involved when military personnel initiate an application, several soldiers who asked not to be identified had convinced themselves that even inquiring about a loan could lead to a superior’s finding out about their problem — and any errors in judgment that led up to it.
That makes it tempting to head away from the post for extra money.
A few miles south of Fort Campbell’s gates, Nicole Allen was working the front desk at Grifols Biomat USA Plasma Center, which had a “Welcome Home Troops” sign over the entry. About 20 percent of the people who come in to sell that part of their blood are enlisted men and women, she said. New donors can earn up to $1,100 in their first month.
A donor referral program can yield even more. “That’s how we see the military,” Ms. Allen said. “They tell the whole company.”
But what if you need more than that?
The lender at the front of the line
The founding mythos of Omni Military Loans begins with Staff Sgt. Fred Nives. After World War II, he wanted a car but couldn’t get a loan.
The firm that he started decades ago has a branch near Fort Campbell, a prime corner spot in a well-kept strip mall. Accolades cover the walls, including a years-old Better Business Bureau “torch” award: Omni had been a local semifinalist for ethics.
The company offers a simple product — installment loans of $500 to $10,000 that last up to 36 months. The term length is no accident. Most people stay in the Army for at least that long but often go delinquent on consumer debts when they leave the service.
Omni makes it very easy to pay, with a set-it-and-forget-it system that other lenders can only dream of. Decades before automatic payments from checking accounts were common, the Department of Defense gave soldiers the ability to pay bills through its allotment system. Soldiers divvy up their paychecks before they hit their bank accounts, sending some back home or, in the case of Omni, to pay off a loan.
The system effectively puts Omni ahead of any other creditor. Nearly all Omni borrowers sign up for allotment, though for years they had no choice, according to the federal consumer bureau. The agency said in a 2020 consent order that Omni illegally mandated that customers pay via allotment.
Sheryl Smith, its chief risk and compliance officer, maintained in an interview that the company had never required paying by allotment and added that the consumer bureau had not asked the company to pay restitution. When it complied with the agency’s instructions to remind all borrowers that using allotments was optional, she added, there was “very, very little” response from people who wanted to pay some other way.
Those borrowers can take comfort that they’re not being cheated, according to Omni. The company’s site boasts that people with good credit “may receive a very competitive rate,” while adding that its loans top out at 35.95 percent. That’s just under the cap that the federal government imposes.
A battle that never ends
The continuing tussle — military counselors, the Department of Defense and regulators on one side, local lenders charging 20- or 30-some percent on the other, military-focused credit unions trying to wear the white hat — doesn’t have a winner yet. There may never be one.
Holly Petraeus saw the back and forth up and down Fort Campbell Boulevard up close. She lived at Fort Campbell twice while her husband, retired Gen. David H. Petraeus, rose up the Army ranks.
And eventually, off-property temptations were no longer only by the side of the road.
“I remember talking to a very frustrated platoon sergeant,” said Ms. Petraeus, who worked for the Consumer Financial Protection Bureau in a senior role protecting soldiers and veterans before she retired in 2017. “He said, ‘I can hang over that guy 23 hours per day, but in the 24th hour, he’s on the computer and taking out a loan on the shady website that he found.’”
Ms. Petraeus expressed the highest admiration for people like Ms. Guzman and Mr. Jones, the Fort Campbell counselors. They are, in their defense of our defenders, soldiers of a sort. But theirs is also a job that will probably never end.
“You get a whole new crop of recruits in every year,” she said. “And every year, you have to push that rock up the hill one more time.”
Audra Melton contributed reporting.
