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

Nov. 14, 2007

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.

READ the complaint.