Military members pay price for finance plans

A representative of Chicago-based Metropolitan Educational Enterprises left the couple with the impression that he was affiliated with the education center at Fort Stewart, the massive southeast Georgia army base. He said he wanted to talk with them about books for children.

“So I let him in,” said Natalie, the mother of a 3-year-old and a newborn, whose husband is now serving in Iraq.

By the end of the evening, the couple agreed to buy a $2,287 package of encyclopedias and educational books — financed with payments of $79 a month. A year later, the new library that they envisioned as a means to educate the family is instead an expensive lesson in the dangers of debt for military families.

Members of the military are popular targets for businesses selling expensive goods on finance plans. That’s because the military views a debt as a potential security threat and a moral obligation — not simply a private legal matter. A lender can contact a soldier’s commander about a payment problem, and the commander can pressure a soldier to pay or order financial counseling.

“There is certainly an appeal to the military customer because you know they have a steady paycheck and you know they have a chain of command that can be appealed to for debt collection,” said Lt. Col. Les’ Melnyk, a Department of Defense spokesman.

The military acknowledges that its help with collections may encourage some questionable businesses to crowd around bases or sneak through the gates, though it’s illegal to solicit door-to-door on base.

“You never want to get in trouble with your commander on debt,” said Lt. Col. Nathan Banks, an Army spokesman at the Pentagon.

The military warns soldiers about the dangers of debt, Banks said, but that doesn’t mean soldiers are always savvy enough to resist offers.

“It’s a trap,” he said. “It’s a foxhole they get caught in.”

It’s also a matter of national security, Melnyk said. “If the troop’s mind is not focused on the job because creditors are calling at all hours of the night, he’s got a readiness problem. It’s not just some soldier’s sad story.”

Leonard Bieber, president of Metropolitan Educational Enterprises, said the company had been in business since 1968 and sells a range of educational materials through independent contractors.

“The very few complaints we have had over the last 40 years would be miniscule compared with our sales,” Bieber said. He declined to reveal the company’s sales volume, but provided the AJC with a dozen testimonial letters praising its products.

It’s unclear how many military families have done business with Metropolitan Educational Enterprises. Numerous complaints from military families stationed across the country have been posted on consumer-oriented Web sites.

Bieber, the company president, said sales are conducted by independent contractors and the company does not control when and where the salespeople work.

Georgia Watch, a statewide consumer organization, is conducting its own investigation.

Concern about the impact of debt on military families became a central issue for advocates, lawmakers and the military in recent years when high-interest payday lenders and car title lenders started congregating near bases.

The state Legislature shut down Georgia’s payday lending industry in 2004 after hearing testimony that the loans were hurting Georgia’s military families. Congress took on the issue in 2006 and limited annual interest rates for military families to 36 percent for payday loans, car title loans and tax refund loans.

Allison Wall, who stepped down this month as executive director of Georgia Watch, wondered how a company like Metropolitan Educational Enterprises was gaining access to military bases, especially to sell expensive products that are available free at military or public libraries.

“Trying to prey on concerns about providing a good education for your family, that is disgusting,” Wall said. “You really don’t anticipate that purchasing books or learning materials is going to get you into a cycle of debt.”

Fort Stewart said the company did not have a permit to conduct business on the base. Permits are issued to some companies, but door-to-door sales are “absolutely forbidden,” said a base spokesman.

Natalie and Allen Sanches weren’t in the market for an encyclopedia set when the salesman stopped by their home on Fort Stewart.

The salesman sat in their living room and showed them pamphlets and talked about how the products would be great for children and for them — with opportunities for college study. “It seemed like it was going to be really nice,” Natalie said.

The cost, financed at 18 percent a year for three years, would be deducted from the couple’s bank account. Natalie Sanches said she was disappointed with the books when they arrived. “I called and asked if I could send the stuff back. He told me no.”

Federal law gives consumers three days to cancel a contract from a door-to-door sale.

Sanches did not receive the materials until long after the three days expired.

A battle between the company and the family ensued. The company immediately began aggressive collection tactics.

“They were calling my husband at work and harassing him and he was getting into trouble for it,” she said.

The company wrote to Allen Sanches’ commanding officer for assistance collecting the money.

Sanches said the company contacted her husband in Iraq, adding to an already stressful situation. “They don’t need to be bothered with any kinds of issues here,” she said. “They have bigger concerns.”

Bieber, the company’s president, discounted the complaints Sanches found online. “Anybody can put something on the Internet. Most of those are people who don’t pay or won’t pay.”

After the AJC interviewed Bieber, he sent a letter to Natalie Sanches saying the company had forgiven the debt.

Clark Howard, the Atlanta-based consumer guru, said commanders should be investigating how the company got onto a base instead of pressuring soldiers to pay.

“It never ceases to amaze me,” he said, “that the men and women putting their lives on the line end up getting ripped off by people who get on base and eat up their wallets.”

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Other complaints

Metropolitan Educational Enterprises says most of its customers are more than satisfied. But consumer advocates say the company is preying on members of the military.

● Sierra Lyons said she and her husband, a Marine now in Iraq, were solicited on base in North Carolina and agreed to buy a $2,500 package of books. Lyons said they didn’t get all the products they were promised and rarely use what they did get — except for the children’s books. “I could have went to any little bookstore and bought the same children’s books for probably $40,” she said.

She said a representative of the company called “screaming at me, threatening me” when a change in their debit card apparently caused a glitch in payments. She now wonders whether they will ever pay off the debt: She said they have been paying since the fall of 2006 and still owe $1,000.

● Ashley Padgett said she and her husband, who is in the Navy, were solicited at their home in San Diego. They agreed to buy a $3,900 package of books. Padgett said the company would not let her return the materials shortly after they arrived.

“I know it’s our fault because we fell for it,” she said. “But he made it seem like it was going to be this great thing.”

The couple’s payment plan for the books, many of which have never been used, will cost $136 a month for three years, she said. That’s a costly bill for the couple, who are expecting their first child.

“I would hate for this to happen to anybody else,” she said.

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Consumer advice: Door-to-Door sales

The Governor’s Office of Consumer Affairs advises consumers not to rush into a decision about a purchase, especially when high-pressure door-to-door sales are involved.

● For most products or services sold door-to-door, a consumer has the right to cancel a contract within three business days after signing.

● Door-to-door contracts must contain information about cancellation.

● For more information: Governor's Office of Consumer Affairs