Gov't Illegally Taking Money from Soldiers, Vets Who Used Mil. CC's, Lawsuit Alleges

http://www.citizen.org/pressroom/release.cfm?ID=2544

Government Is Illegally Taking Money From Soldiers and Veterans Who Used Military Credit Cards, Lawsuit Alleges

Public Citizen Files Class Action on Behalf of Soldiers and Veterans Nationwide

WASHINGTON, D.C. – The Army and Air Force Exchange Service (AAFES) is breaking the law by taking money from soldiers and veterans who have military credit card debts that were either improperly calculated, too old to collect or both, Public Citizen said today in a lawsuit filed in the U.S. District Court for the Northern District of California in San Francisco.

Public Citizen, with San Francisco consumer lawyers Chandler Visher and Marie Appel, filed the suit on behalf of veteran Julius Briggs and a class of soldiers and veterans nationwide.

For years, the AAFES has offered credit cards, known as Military Star cards, to military personnel to purchase uniforms and other items from the stores it operates on military bases. If a service member is delinquent in paying a debt, the government has the right to deduct the money owed from the member’s government benefits or tax refunds. The government can add interest, penalties and administrative costs as permitted by the credit card contract or federal law.

AAFES, however, is not permitted by law to collect debts that have been outstanding for more than 10 years or amounts in excess of what the contract allows. In improperly collecting these debts, the AAFES has steadily appropriated millions of dollars from soldiers and veterans nationwide, Public Citizen says.

“It is shocking that a U.S. government agency would illegally take this money from veterans who have served our country well, particularly from those veterans who may be depending on government benefits,” said Deepak Gupta, an attorney for Public Citizen who is working on the lawsuit.

Briggs, the plaintiff, is a 21-year veteran of the U.S. Army and Army Reserves with an honorable record. He served in Germany and later in Saudi Arabia in the aftermath of Operation Desert Storm. While on active duty in 1977, he suffered a back injury that has since limited the number and types of jobs he can take.

Since 2004, the U.S. government has withheld more than $2,300 in federal payments to Briggs to pay an AAFES debt that was outstanding more than 10 years. The withheld payments have caused Briggs to be unable to pay his housing costs, leaving him homeless for several periods over the past few years. Not only has the government collected money beyond the time limit, but it also has inflated the amount due through improper interest rate calculations.

“With any luck, this lawsuit will force AAFES to stop collecting money that it has no right to take,” said Briggs.

The lawsuit seeks an injunction against further illegal collection of debts by AAFES and restitution of all funds inappropriately collected.

If you read the article AAFES has been doing this for at least the last 10 years, so that puts the ball in Clinton's court as well.

If you want to point the finger of blame at anyone it should be the U.S. Army and U.S. Air Force, and let
s throw in the Congress for good measure.

I despise Bush, but being someone who has a Military Star Card, this isn't his fault. The lack of action by all parties is to blame, and they are the only pones who can fix this, but don't count on it.

They started withholding his benefits in 2004!

for debt collection have been transferred to an outside source similar to IRS collections.

This got stored in my cyberkeller, from '02. I'm pasting about half of it:

Ordered Into Debt
Pentagon Brass Force Credit Debt On Soldiers and Sailors
Geoffrey Gray is a writer based in New York City. His work has been published in The New York Times, New York Magazine, and The Village Voice.

Editor's Note: This article originally appeared in The Village Voice, and is reprinted with permission.



The numbers were staggering: $3,400 for a sumo-wrestling outfit, $16,000 for a corporate golf membership, $38,000 in cash advances for lap dances. All were part of a $101 million shopping spree made with "government purchase cards," the U.S. military's version of corporate credit cards -- another made-for-media scandal of reckless Defense Department spending.

But throughout congressional hearings on the topic in July, the real scandal with the military's other piece of plastic, the Government Travel Card (GTC), went ignored by the mainstream press, despite the fact that the card has plunged thousands of ordinary servicemen and servicewomen into debt so deep that the Pentagon is busy garnishing the wages of its own soldiers. And the only military commander known to raise hell about the scheme -- a lone Air Force colonel based in the Midwest -- says that blowing the whistle on the GTC ruined her career.
"The desperate rush to privatization has a million warts."

Lower in the ranks, the damage has been considerable. U.S. soldiers in Afghanistan have found themselves stranded in the desert without a dime because their credit was suddenly cut off, according to a May 29 report in the Military Times, leaving families behind in a nasty catch-22: Swallow the debt, or borrow more money to pay the bills so their credit wouldn't be ruined.

Concocted by Congress in 1998, the GTC was designed to privatize the accounting of federal travel expenses and touted to save taxpayer money. (It also reaps huge fees by the financial conglomerates that issue the cards.) It works like this: Servicepeople are ordered to apply for personal GTCs -- interest-free credit cards issued exclusively by the Bank of America. Instead of requesting vouchers or getting cash to pay for travel expenses, servicepeople pay up front with the their own GTC cards -- essentially floating interest-free loans to the government. As a result, they have to submit expense reports and wait for reimbursements.

But reimbursements often come late, according to a report issued in March of 2002 by the General Accounting Office, which means the GTC bills aren't always paid on time and servicepeople are getting branded as "delinquents." The GAO found "substantial" delays in reimbursements; in one command unit, for example, the California National Guard failed to pay its personnel within a month 61 percent of the time, and of those payments, 42 percent were inaccurate.

Just in the past year, the names of more than 10,000 military personnel have been reported to national credit bureaus as "credit risks," according to the Military Times. Instead of changing the mechanics of the travel card system, however, the DOD and the bank have only tightened their grip on cardholders; since October, the Pentagon has garnished over $19.5 million from military paychecks to pay off "delinquent" GTC bills, according to DOD accountants.

"It's totally unbelievable," says Ed Mierzwinski, consumer banking advocate at the U.S. Public Interest Research Group. "The notion that you're forced into a contract -- one where you can't pay your bills on time -- and the Pentagon takes it out of your paycheck is outrageous." Military personnel have even less cushion than civilians: Annual pay for an E-2 private is between $11,000 and $14,000.

"It's a pathetic situation when soldiers are forced to buy into a system that's likely to screw them personally," says Danielle Brian, executive director of the Project On Government Oversight, a D.C. nonprofit watchdog group. "This is just another example where the Pentagon has conjured up a scam with a favorite contractor. The desperate rush to privatization has a million warts."

By putting the burden of bookkeeping on its servicepeople and the bank, the Bank of America claims that the Pentagon has saved anywhere from $100 million to $450 million a year in administrative costs. Meanwhile, Bank of America has acquired an entire new fleet of captive consumers: more than 1.4 million servicemen and servicewomen ordered by law to use the card for every travel expense till 2008.

Pentagon officials contend that the program is beneficial to both taxpayers and servicemen. Consumer advocates laugh.