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Payday Loans Cashing In on Military Families

By Eric O'Connor

Buffalo, NY – U.S. Senator Charles Schumer said scams that charge up to 900 percent interest on loans are targeting local military personnel.

The senator visited North Tonawanda Thursday to warn local military families about the scam and to demand the FDIC put these high interest lenders out of business.

"IF the FDIC would shut them down, we wouldn't have to deal with this problem, and our military would be able to get loans when they need them, but at 10 percent, 12 percent, or 14 percent, not at 400, or 600 or 900 percent," said Schumer.

Schumer said the scam provides quick cash to soldiers, but at astronomical interest rates disguised in fine print.

It is illegal in New York State to charge more than 25-percent interest on a loan.

But Schumer said the FDIC allows out-of-state banks to charter these loans in New York.

The scams have been popping up around military bases in the last decade, affecting as many as 10 percent of service men and women.