The 900-Percent Ripoff
They call themselves JAG NY – but the company has nothing to do with the Judge Advocate General’s office.
JAG NY is the corporate name for N.Y. Catalog Sales, owned by one John Gill. This upstanding citizen operates two stores just outside Fort Drum Army base north of Syracuse, N.Y., and a third further away. This guy has an interesting MO.
He lures young military families into his stores with an offer to “give” them $50 in cash for each $15 purchase. All they have to do is pay back the “gift” next payday, with a bit extra for his trouble, of course – about $20 for every $50.
Do the math: For payday fifteen days away, that’s 900 percent annual interest!
I know, a sucker is born every minute. But put this into perspective. For the most part, these are families of soldiers at war in Iraq. They are strapped for cash, and may not even see the implications of what is happening. These wives (and husbands) pay Gill with a post-dated check good the following payday, and Gill is the first in line at the bank to cash the checks on payday.
According to New York state Attorney General Eliot Spitzer, who has taken a personal interest in this case, families often have to borrow again to just to cover the checks. And Gill is more than happy to accommodate them.
On Wednesday, Sept. 1, 2004, Spitzer filed a civil lawsuit in New York against Gill and his nefarious operation, accusing him of violating New York ’s loansharking laws. Conviction is fairly certain, but current law suggests that any punishment will be a hand slap and a small fine.
Sen. Charles Schumer, D-NY, is urging the Federal Deposit Insurance Corp. to close the loophole that allows lenders to partner with banks to offer loans with excessively high interest rates. Eventually, this may stop the payday loansharking operations they prey on young military families.
In the meantime, however, military members and their families everywhere should stay away from these parasites. Military credit unions offer a fine alternative at reasonable rates to any service member strapped for cash, and they help members get their finances in order so they no longer run out of cash before they run out of month.
Robert G. Williscroft is DefenseWatch Navy Editor