A Fort Benning Army infantryman is suing an Atlanta-based title pawn lender for making loans he argued are illegal under the Military Lending Act.
Staff Sgt. Jason Cox used the title to his SUV as collateral for a $3,000, 30-day loan. After nearly a year of rolling the loan over and trying to pay it back, Cox gave up and the company repossessed his car.
“That debt just mushroomed,” said one of Cox’s attorneys, John Bevis. “Initially it was $3,000, and after paying on it for almost a year, he still owed over $4,000 on it.”
Bevis said Cox was paying over 100 percent interest on each of those 30-day loans. Cox is also represented by former Gov. Roy Barnes.
A Community Loans of America representative said the company had no comment on the suit and then hung up on GPB.
The Military Lending Act prohibits lenders from charging service members more than 36 percent interest or requiring a car title to secure a loan.
Congress enacted the law in 2007 in response to a Pentagon report that payday and car-title loans undermine military readiness and hurt troops’ morale.
“The most common reason why a soldier or sailor loses their security clearance is for financial reasons,” said Uriah King, vice president of state policy at the Center for Responsible Lending. “And that’s because of the Defense Department’s belief that folks struggling with debt make prime targets for foreign intelligence services.”
King said payday and car-title lenders go after service members because they often have low income, but it’s virtually guaranteed.