Watchdog group applauds House legislation to crack down on unscrupulous
lenders like Pioneer Financial Services
June 28, 2005, Los Angeles, CA - Public Interest Watch (PIW) applauds
new legislation passed by the U.S. House of Representatives designed to eliminate the
unscrupulous practices of military lenders like Pioneer Financial Services, Inc (Pioneer).
The "Military Personnel Financial Services Act" (H.R. 458), passed by a resounding margin
of 405 votes to 2, seeks to protect service members who are routinely targeted by
misleading marketing for insurance and high cost loans. The bill requires explicit
definitions of loans and their consequences to avoid exploitation from military lenders
such as Pioneer, whose loans include high interest rates and hidden costs – including
late penalties and origination fees.
H.R. 458 stands in contrast to proposals like H.R. 97 which was introduced by Rep. Sam
Graves (R-MO) apparently at the behest of Pioneer Financial Services, after three Pioneer
executives contributed sizeable donations to Graves' campaign.
Pioneer, a Kansas-based company, has been at the center of the controversy over predatory
lending, criticized for misleading marketing and questionable practices that avoid the
protections provided by the Soldiers and Sailors relief act.
H.R. 458 closes a glaring loophole in H.R. 97 that would have given Pioneer Financial
Services, Inc. (Pioneer), which offers consumer loans exclusively to military personnel
and military retirees and is a constituent of Rep. Graves, a monopoly on high-cost loans
to soldiers.
According to Fein, "Instead of protecting service men and women, H.R 97 would have effectively handed the market over to Pioneer," a company that has been roundly criticized by the National Consumer Law Center for it's marketing practices and was the subject of a New York Times feature on the exploitation of U.S. military personnel. "H.R. 458 provides service members needed relief and undermines the pay for play efforts of Pioneer and Representative Graves."
H.R. 458's limitations on collection activities and provisions requiring the explicit
definition of a loan's consequences offer military personnel real protection. PIW
Executive Director, Lewis Fein, emphasized "H.R. 458 is a genuine attempt to unburden
our military personnel and shield members of our armed forces from the unscrupulous
practices of high cost lenders."
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PIW is a Washington, DC-based nonprofit corporation, with additional offices in
California. The group seeks to spotlight abuses of public trust by non-profit organizations,
government and regulatory officials.
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