WASHINGTON A new federal database of scammers who target the military population should help prevent abuses such as the SmartBuy scandal that lured Fort Drum soldiers to buy computers at marked-up prices with high-interest loans, officials said Wednesday.
The federal Consumer Financial Protection Bureau and state Attorney General Eric T. Schneiderman announced a national network that will tip off law enforcement agencies about companies or people who have a history of financial scams against service members. The database should help prevent scammers from moving from one military community to another, officials said.
This is a great success in government, Mr. Schneiderman said at a news conference at the bureaus headquarters.
Mr. Schneidermans office sought the national network after discovering that Rome Financial Co. of California had sold computers through a store called SmartBuy at the Salmon Run Mall, charging far more than customers would pay elsewhere and requiring financing packages that sounded attractive at first but ended up hitting exorbitant rates. Rome Financial was an unlicensed lender, the attorney generals office said.
One soldier reported buying a computer for $5,200 that should have cost around $2,000. Customers incurred interest rates as high as 19 percent, with no option to pay off the balance early and no ability to pay by cash or credit card.
The New York investigation found similar schemes near military posts in California, Tennessee, Colorado, Georgia, North Carolina, Oklahoma, Tennessee, Texas and overseas.
Mr. Schneiderman said Wednesday the operation was one of the most egregious things Id seen as attorney general.
The attorney generals office reached a $3.5 million settlement with Rome Financial to erase soldiers debt in August. The settlement benefited 995 Fort Drum soldiers.
The database, available only to law enforcement agencies, will be called Repeat Offenders Against the Military, or ROAM.
Fraud on this scale demonstrates the need for a database like ROAM, said Richard Cordray, bureau director. He gave Mr. Schneiderman credit for the idea. The database will contain a record of all civil and criminal action against alleged scammers.
Knowledge is power, Mr. Cordray said.
Officials said the system will, for the first time, give law enforcement agencies and the military the ability to know whether a scam in operation across the country, for instance, has spread to their region.
This also enables us to be more proactive, alerting military bases about what type of scam might be coming, Mr. Schneiderman said.
The information will also be helpful in prosecuting cases, Mr. Cordray said.
Military communities are attractive to scammers because young soldiers move frequently and may be relatively inexperienced in personal finances yet have dependable paychecks for the time they are committed to the service, said Holly Petreaus, assistant director for the CFPBs Office of Servicemember Affairs.
In some cases, she said, a military base may represent one of the biggest payrolls in a state.