Authorities in the Unites states have launched an investigation into the loans being offered to servicemen and women in the country by banks.

Officials from the department of defence have launched a review of a possible abuse of system by banks and associates for offering loans to soldiers, sailors and Marines. The investigations were launched following a return of $6.5 million to thousands of service members by a bank for not disclosing fees on expensive auto loans.

The investigation targets an allotment system that allows service members to channel a part of their salaries automatically to the banks. These banks and partners automatically deduct payments directly from the government before pay checks are given to the service members.

The allotment system was made before the automatic bank payments became a common practice among the banks in the country. Secretary of Defence Chuck Hagel announced that a team of enforcement agencies and bank regulators will now review the entire system to check any abuse my parties.

Mr. Hagel said that the investigations will ensure that the system "no longer creates an opportunity for unscrupulous businesses and lenders to take advantage of those who serve in the Armed Forces."