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Behind the numbers: Servicemember complaints

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14,100. Sounds like a random number, doesn’t it? But to us, 14,100 represents the number of servicemembers, veterans and their family members whose stories have come to us through their consumer complaints.

I emphasize the word “stories” because each complaint is much more than a case number. Behind those case numbers are servicemembers with questions about mortgages, military spouses seeking to invoke consumer legal protections on behalf of their deployed spouse, veterans desperately fighting scams that threaten to steal their retirement income, and many more members of the military community with compelling, sometimes heartbreaking, real-life stories.

In the Snapshot of complaints received from servicemembers, veterans, and their families that we’re releasing today, you’ll find the types and trends of military consumer complaints that the CFPB has handled since opening our doors in July 2011. We have received complaints from all 50 states and from all branches and ranks of the military. Our complaint volume increased 148 percent from 2012 to 2013 as we spread the word about the resources that we provide to the military community. Mortgages continue to top the cumulative volume of complaints handled to date.

However, newer categories of complaints we began accepting last year, such as debt collection and payday loans, have climbed steadily and now factor prominently into our complaint totals. In fact, since we began taking debt collection complaints in July 2013, debt collection has quickly become the highest volume complaint category for military consumers over the last seven months. Within the report you will find a breakdown of the complaints by product as well as the top issues within each product for military consumers.

More than a million dollars in relief

Contained within the report are company-reported monetary relief amounts. The amounts vary by product, but, overall, military consumers have received more than $1 million in monetary relief. We’ve also assisted many military consumers in obtaining non-monetary relief, such as correcting credit report errors, in a number of cases helping to address problems that may have been affecting the consumer for months or even years.

At the Office of Servicemember Affairs we work to monitor consumer complaints submitted by the military community and the resolutions to those complaints. Simply put, our job is to keep an eye on the consumer financial issues causing servicemembers, veterans, and military families to come to us for help, and to see if those issues are addressed through our complaint system. Our snapshot report gives you an idea of the numbers of complaints submitted as well as how the companies have responded.

If you’re a member of the military community who needs assistance with a consumer financial issue, or you know a servicemember, veteran, or military spouse in that situation, think about submitting a complaint. Even if you don’t have a complaint, and you just want to share an experience in the financial market place, consider telling us your story. We’re listening.

New feedback system for GI Bill and Tuition Assistance recipients

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In April 2012, at Fort Stewart, GA, I was privileged to watch President Obama sign Executive Order 13607: Establishing Principles of Excellence for Educational Institutions Serving Service members, Veterans, Spouses and other Family Members.

The Order directed the Departments of Veterans Affairs and Defense, in consultation with other government agencies, to create a system that would hold educational institutions accountable for the quality of the programs that they provide to those who use military-related education benefits. Its intent was to give military personnel, veterans, and their families the information they need to make informed decisions about where to spend their hard-earned military benefit dollars – and a place to complain if things went wrong.

Today, the CFPB is very pleased to join the Departments of Veterans Affairs, Defense, Education, and Justice, as well as the Federal Trade Commission, in announcing a new online student complaint system where servicemembers, veterans, and their families can report negative experiences at education institutions and training programs administering the Post-9/11 GI Bill, DoD Military Tuition Assistance, and other military-related education benefit programs.

This new feedback system, modeled after CFPB’s complaint system, will help the government identify and address unfair, deceptive, and misleading practices. It’s also intended to have the larger effect of ensuring high-quality academic and student support services for veterans, service members, and their families.

Thanks to all the interagency partners who worked so hard to create this tool that gives military and veteran students the ability to help shape and improve the higher-education experience for themselves, their families and future veterans!

GI Bill recipients can use the new VA GI Bill® Feedback System. DoD Tuition Assistance recipients can provide their feedback as well.

Servicemembers, you have new mortgage protections in 2014

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It’s no secret that the housing crisis in recent years was particularly hard on military families. Servicemembers and their spouses at installations around the country, and even abroad, cited problems with mortgages as some of their most serious financial challenges. But now, the CFPB has written new mortgage rules that can help.

More than a third of the consumer complaints we’ve received from the military are mortgage-related. And at listening sessions around the country, concerned military families have told me about the painful consequences of poor mortgage servicing, sloppy lender recordkeeping, and inconsistent foreclosure practices. Obviously, servicemembers aren’t the only homeowners who have run into trouble with mortgage servicers or faced financial hurdles. But the demands of military service sometimes increase the severity of the problems or limit the solutions available to address them.

So, I’m happy to report that we’ve written new rules that address some of the worst problems in the mortgage servicing industry and bring new rights and protections to borrowers, including servicemembers. For military families, this means that when they seek help for a troubled mortgage or have to move because of Permanent Change of Station (PCS) orders, they will get fewer nasty surprises and face less risk of losing their home.

Here are some changes that should help servicemembers:

  • Restrictions on dual tracking. In the past, servicemembers dealing with mortgage troubles sometimes found that their mortgage servicer had moved forward to foreclose on their home at the very same time it was working with the servicemember on a potential loan modification. That’s called “dual tracking” and our new rules set up clear guidelines that restrict this practice.
  • More help for troubled borrowers. Too often servicemembers have had to apply over and over again for programs that might help them keep their homes, being asked to send in the same paperwork repeatedly. Our new rules require mortgage servicers to evaluate a borrower who files a complete application for help for all the options that are available to that borrower. That means no more multiple rounds of applications and wasting of precious time and resources for the homeowner seeking help!

    You can find out about options for helping servicemembers with a troubled mortgage by watching our Military Educator Forum on the subject, finding a HUD-approved housing counselor , or calling 888-995-HOPE (4673). You can also Ask CFPB for answers to your mortgage related questions.

  • No more runarounds and missing documents. Our rules require mortgage servicers to train their people to answer your questions and, if you do run into trouble, the servicer has to assign people to help you. The servicer also has to have policies in place to make sure they don’t lose your paperwork.

Those are some of the new rules. In addition, servicemembers should know that we issued guidance in June 2012, along with other regulators, saying that mortgage servicers should have processes in place to handle requests for assistance from servicemembers with PCS orders, and that they should clearly communicate their policies.

In 2011, two important players in the mortgage market —Fannie Mae and Freddie Mac —updated their policies to say that a PCS move is considered a “qualifying hardship” for mortgage assistance options for servicemembers. In other words, servicemembers do not have to be behind on their mortgage payments before they can ask for help. It was also announced that a homeowner with a Fannie or Freddie loan and PCS orders will automatically be eligible for a short sale.

Also, those servicemembers who do a short sale (selling their home for less than they owe on the mortgage) will not have to pay the difference between the original loan amount and the proceeds from the sale if the property is their primary residence and it was purchased on or before June 30, 2012.

Finally, the U.S. Department of Veterans Affairs (VA) also has provisions for a short sale called a “compromise sale.” Servicemembers should contact their lender or the VA for more information on this program.

We work closely with the military community to get the word out about any policy changes that affect servicemembers. We encourage servicemembers and their spouses to talk to their JAGs or military Personal Financial Managers (PFM) about these issues, too.

We hope our new mortgage rules will allow servicemembers to spend more time on their important mission and less time worrying about their mortgages. Learn more about our work on mortgages.

Know your financial adviser

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Just like planning for retirement, choosing a financial adviser can be much more challenging than it sounds—especially for senior needs. Today, we’re releasing “Know your financial adviser,” a guide to help you ask the right questions if you’re shopping for an adviser with a title suggesting expertise in senior financial planning. Titles like “veteran’s adviser,” “retirement adviser,” “senior specialist,” “benefits coordinator” or even “financial planner” don’t always mean the professionals are qualified to help you manage your money. Some titles require in-depth training, while others are easily picked up over a weekend.

For some military retirees, the decision is complicated even further by the need to find an adviser who understands the complexity of their retiree pay, veteran’s benefits, or disability benefits. This adviser should also understand the full financial impact of other benefits like TRICARE, commissary privileges, survivor benefit plans, and veteran’s service organization membership benefits.

Here are four things to think about when evaluating a financial adviser’s title or credentials:

  • How much training is required? Senior financial planning is a complex field which includes topics like estate planning, income tax laws, and investments. Some titles therefore require college-level coursework and passing tough exams, which can take many months or even years to complete.
  • Is your adviser qualified through a training program that holds its members to strict ethical standards? You should be able to file a complaint easily with the organization that issued your adviser’s financial title, as they may discipline or ban members who don’t follow the rules.
  • Is your adviser’s financial title accredited? Accredited programs have taken important steps to ensure the quality of their training.
  • Does the adviser have an extensive background working with a specialized group like military retirees? Just because someone calls themselves a veteran’s adviser doesn’t mean they know anything about military retiree pay systems, veteran benefits, or even the military, for that matter.

In addition to learning how to find a qualified financial adviser, you can also protect yourself by learning how to spot signs of potential financial fraud by phony advisers looking to exploit you.  You can download a copy of our previously released Money Smart for Older Adults – Prevent Financial Exploitation guide to help you spot the warning signs.

Most financial advisers have worked hard to earn the knowledge and skills required to help you. But credentials and promises alone don’t guarantee expertise or the quality of someone’s training. It’s up to you to look closely at the training, background, and quality of service when picking someone who promises to help you protect and grow your well-earned nest egg.

To learn more about our work on senior designations, read our guide.

What military families should know about payday loans

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Starting today, you can submit payday complaints to us. So this seems a good time to remind you that if you are a servicemember on active duty you, your spouse, and certain dependents have the protection of a special law called the Military Lending Act (MLA). The MLA says that you can’t be charged an annual percentage rate higher than 36 percent on certain types of consumer loans, and that includes certain payday loans as well as auto title loans and tax-refund anticipation loans.

So what exactly is a payday loan? It tends to be a short-term, usually high-cost, cash advance where you pay a fee to borrow money (for example, a $15 fee for every $100 borrowed) and you are expected to pay it back in a short time, usually a couple of weeks. People often tell us that the MLA cap of 36 percent seems like a pretty high limit – but what they don’t realize is that the average annual percentage rate on a payday loan like the one above is 390 percent! And if you roll over the loan repeatedly because you can’t pay it off like you hoped you could, then the cost can skyrocket over time. We’ve seen examples of payday loan borrowers who end up paying far more in fees than the amount they originally borrowed. In some cases they could have gone to one of the military relief societies, if it was an emergency, and gotten a loan at zero percent interest. Yes, zero – no fee at all.

So, the good news is that the MLA provides you protections that the average citizen doesn’t have when it comes to payday loans. And the CFPB is one of several federal agencies that have the power to enforce the MLA. But your complaints are key to helping us enforce it and other consumer financial laws.

You can submit a payday complaint online or by calling (855) 411-2372. Don’t forget to tell us you’re “military” when asked!

Complaints help us spot trends. Submitting a complaint helps us see patterns, focus our resources, and identify the worst actors – so your complaint can make a difference!

Trick-or-treating for your money

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When it comes to tricking you out of your money, for scammers it’s Halloween all year long.

In 2011, an estimated 25.6 million adults (10.8 percent of the U.S. adult population) were victims of fraud. Consumer scams can take many different forms, from direct marketing to affinity scams and involve everything from identity theft to pension poaching. However, there are a few general tell-tale signs that you can look for if you’re trying to decide if a financial product or service you’re being offered is a scammer’s trick or a financial treat.

Phantom riches

There are a lot of bogus offers out there that guarantee huge investment returns, windfalls of money, or a fast track to important benefits for only a “small” fee or investment on your part. It could be the offer of a loan at a great rate of interest – as long as you send in a “security deposit” first. Once you do, “poof!” your money disappears along with the scammer who made you the offer.

Or, maybe it’s an offer to help you get thousands of dollars in benefits from the Department of Veterans Affairs– for a fee. If you’re a veteran interested in getting benefits like Aid and Attendance, you should be wary of any paid advisor who offers to help you qualify for the benefit or who claims to be able to get you the benefit more quickly than anyone else.

Superheroes

Scammers would like you to believe they have superpowers, often claiming inflated credentials and experience in order to access your money.

Distressed homeowners may fall prey to mortgage relief companies that offer to help them with their mortgage or foreclosure problems for an up-front fee. These self-styled heroes will tout their credentials and promise to help solve your problems, but often leave you worse off than you were before. And it’s illegal for them to charge you an advance fee for help, so report them by submitting a complaint online or by calling (855) 411-2372.

Make sure you thoroughly research anybody who offers to help you with a consumer financial problem! Even the fact that they may have been in the military themselves isn’t a guarantee that they are going to treat you right.

Zombie debt

Zombies can come back from the dead and so can your debts. You may have a debt from years ago and suddenly a debt collector is contacting you demanding that you pay it back – now. Financial institutions sometimes sell old debt to other businesses, which then try to collect on it. If the financial records aren’t accurate, you may even find you’re being asked to pay back a debt you already paid off – or one that wasn’t even your debt in the first place.

Personal Financial Managers and JAGs can help servicemembers review any demand for debt repayment that you don’t fully understand. We’ve also prepared sample letters that you can use to respond to a debt collector. The letters may help you learn more about the age and other features of the debt and help you protect some of your rights.

Vampires

Vampires prey on the unsuspecting. Fraudsters do the same – using the promise of a special deal or a one-time offer to lure unsuspecting consumers into deals they don’t realize are financial booby traps. Never be pushed into buying something or entering into a financial contract because the product is going fast or the amazing deal is a limited-time offer. Take the time to do your research and get all your questions answered. Ask CFPB is a good place to get some of those answers.

And always remember: unlike the hapless victim in a vampire movie, you have the ability to escape. You can walk away from the table, hang up the phone, or log off the website.

You don’t need garlic, stakes, or torches to fight off the scary forces of consumer fraud – just a little knowledge about the tricks scammers use.

Happy Halloween!