Despite increased efforts to protect members of the U.S. Armed Forces from debt collection abuse, collectors still target military personnel by calling their superior officers or threatening reduction in rank and even court-martial. Holly Petraeus, assistant director for service member affairs at the Consumer Financial Protection Bureau (CFPB), said in a letter that the “sheer volume of debt collection complaints alone” makes the issue important to her office.
Enlisted persons and their families are supposed to receive additional protections from debt collectors because they experience particular financial challenges such as frequent relocation, overseas deployment, and fraud. It is against the law to foreclose on deployed military personnel or charge them interest above 36 percent on high-cost products such as payday loans and car title loans. Under the Service Members Civil Relief Act (SCRA), those entering active duty can have rates on credit cards, student loans, and mortgages reduced to 6 percent. The act also allows them to cancel auto leases without penalty, temporarily place mortgage payments on hold, and use additional tools to prevent foreclosure during deployment.
A report by Petraeus’ office has found, however, that military borrowers often are denied their additional legal safeguards. The CFPB has recovered more than $1 million for veterans and service members who were mistreated by mortgage companies, debt collectors, and payday lenders. Even so, companies still violate the SCRA and other protections. The Financial Fraud Enforcement Task Force is organizing a crackdown on these violations. New details come from the CFPB’s second summary report on 14,100 complaints filed by military consumers from every state, rank, and branch of the military.