NPR logo

Pentagon Wants Stronger Defenses Against Scams

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Pentagon Wants Stronger Defenses Against Scams


Pentagon Wants Stronger Defenses Against Scams

Pentagon Wants Stronger Defenses Against Scams

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

Among the forces lined up behind a new consumer financial protection agency proposed by the Obama administration, one stands out as used to a tough fight: the Pentagon.

Undersecretary of Defense Clifford Stanley recently wrote a letter saying the Pentagon would welcome the protections of such an agency for troops, because "personal financial readiness equates to mission readiness."

And Pentagon officials came across the Potomac into Washington, D.C., on Thursday to discuss the proposed consumer agency with Treasury Secretary Tim Geithner.

As the meeting closed, Geithner summed it up this way: "We heard today a lot of examples of how great the problem still is across the country for people who are serving their country overseas, fighting for Americans."

Among the greatest consumer financial threats faced by members of the armed forces are unscrupulous automobile sales. David Julian, the director of the Office of Personal Finance at the Defense Department, was at Thursday's meeting at the Treasury.

"With our troops being very young, primarily their largest financial obligation that they have is a vehicle," he said. "And since they do have a guaranteed paycheck; they do have other benefits, it could make them an attractive target for harmful practices."

Those shady practices include bait-and-switch financing and falsification of loan documents — scams even lots of older consumers fall victim to.

One Couple's Story

Lacie Riso and her husband, Jarred Whited, a sailor on the aircraft carrier USS Ronald Reagan, have a story that is typical of what many service members face.

"People broadcast that they're here to help military and they support military and, in return, there's fraud and lies and deceit going on," Riso says. "It's hard."

Riso, 18, and Whited, 20, an aviation ordnance man, needed a car because their old one was breaking down. They went to a dealer near their base in San Diego and found a used Hyundai Sonata they liked. Then, Riso says, the salesman contacted a finance company.

"And they say, you know, 'We'll approve them. They need to pay $394 a month.' So we are like, you know, we can do that; that's fine," she says.

Riso and Whited got the keys. They left Riso's old Ford Focus as a trade-in. The next day, they went back to the dealer to set up an automatic payment to the finance company from Whited's military paycheck.

But after several weeks, the finance company said the loan wasn't approved after all. The couple then asked the dealer for new payment information.

"So we say, you know, 'What bank do we pay this to? What's the account number? What's the loan number that you have?' And he told us, 'No, I don't have anything like that. You can pay me cash or personal check to me at the dealership.'"

Riso and Whited turned that offer down and the dealer repossessed the Sonata. They told him to give back the more than $500 they had made in payments, along with Riso's Focus.

"And he said, 'Oh no, you're never going to see your Focus again. Your car was repossessed for nonpayment and you can pay me $800 to get back in this contract,' " Riso says.

Distracting Stress

Riso and Whited got an attorney and sued the dealer. Meanwhile, the dealer and his lawyer say he did nothing wrong. The whole thing is causing Whited a lot of anxiety, Riso says.

"He's stressing out about, you know, 'Is my wife going to be able to make it without me here? I'm going to be out at sea. You know, she doesn't have a car right now. She can't get a job without a car,'" Riso says. "It's just really stressful on him."

That's just the kind of stress the military worries can keep service members from focusing on their jobs and can compromise the military mission. But while the Pentagon welcomes the protections a consumer financial protection agency might give to service members, Julian of the Office of Personal Finance at the Defense Department says it's not the department's role to actively lobby for it.

And what will end up under the agency's purview if it becomes a reality is still up in the air. For example, the House version of the consumer agency exempts auto dealers — like the one Riso and Whited dealt with — from oversight. The version making its way through the Senate does put auto dealers under the consumer agency's authority.