DoD: Troops can't use allotments to buy items on credit (after Jan 1)

http://www.navytimes.com/story/military/pentagon/2014/11/21/troops-allotments-prohibited-consumer-items-on-credit/19335509/

DoD: Troops can't use allotments to buy items on credit
By Karen Jowers, Staff Writer 11:51 a.m. EST November 21, 2014

Active-duty troops will no longer be able to use allotments — direct payments to specific creditors — to purchase, lease or rent consumer items after Jan. 1, defense officials announced Friday. The new policy will apply to any "tangible and movable" personal property such as cars, boats, motorcycles, washers, dryers, furniture, laptops, tables, televisions and cellphones.

The policy won't apply to any allotments currently in place to pay for these items on credit. Allotments are a portion of a service member's pay and allowances that are designated to be paid to a particular person or institution. Other allotments won't be affected, such as those going to family members, savings accounts, charities and investments, and to pay insurance premiums, mortgages and rent. The policy change also does not apply to military retirees or DoD civilian employees.

A senior defense official familiar with an interagency team that reviewed DoD's allotment system noted that troops may still buy these items — they just can't use allotments. Consumer advocates and regulators have documented abuses of the system in which troops were enticed to buy some things using allotments in deals that misrepresented the total cost of the item, the official said. "Getting service members to buy things using allotments, even though they may not be able to afford them, is attractive to unscrupulous companies because payments made by allotment are virtually guaranteed," states a background paper on the policy decision.
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DoD will enforce the prohibition with service members. When setting up an allotment, service members will have to certify: "Under penalty of the Uniform Code of Military Justice, I certify that this allotment is NOT for the purchase, lease, or rental of personal property or payment toward personal property." Refusal to acknowledge that certification blocks the new allotment. On myPay, a banner will appear with the requirement. The manual form for starting allotments will carry the same certification requirement.
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