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Hosting a financial coach in your community

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It’s no secret that having a trusted, well-informed advisor or financial coach can increase your odds of financial success. We know that some people who are transitioning, perhaps from military service, being unemployed, or another tough financial situation, might especially benefit from this one-on-one service focused on their financial and life goals.

That’s why we announced an initiative last year to place trained financial coaches in organizations to provide coaching to consumers, including veterans and those who are low-income or economically vulnerable. Following a full and open competitive procurement process, in April 2014 we contracted with the Armed Forces Services Corporation (AFSC), a Service-Disabled Veteran-Owned Business (SDVOB), to run this initiative. The financial coaches will work in organizations that are already providing other services, including job training, education, social, and housing services.

Here’s how you or your organization can help

AFSC is looking for 20 organizations, in geographically diverse locations across the country that serve economically vulnerable consumers, to host financial coaches. To be clear, this is not an opportunity for a grant, contract, sub-contract, or funding – just to have a financial coach placed on-site at an existing service delivery location. Check out the criteria and see if your organization or one in your community might be the right fit to host a financial coach. If you think it is, send a submission by October 15, 2014.

Protecting servicemembers from predatory auto loans: Harry and Ari’s story

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Protecting consumers from predatory financial products and services is part of our mission and something we take very seriously. We received a Tell Your Story from the father of a servicemember that led to us opening an investigation into an auto loan program. The program, which targeted servicemembers, was found to have deceptive marketing and lending practices. The investigation led to an enforcement action against auto lenders requiring them to refund approximately $6.5 million to over 50,000 servicemembers. Ari, a servicemember, and his father Harry, shared their story with us, and here’s what they had to say:

“It’s very important to speak up because there are people within the government that are there to help us get through challenging financial situations,” Harry said. “It’s very important for any citizen to speak up and just tell your story.” Ari mentioned that: “The fact that the CFPB took action in the name of servicemembers across the entire country… really shows us that someone’s in our corner.”

We were glad to be there for Harry and Ari – they shared their story with us and got the help they needed. To learn more about their story, share your own, or find resources for servicemembers check out consumerfinance.gov/yourstory.

Working together to protect student veterans

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We’re joining the Departments of Veterans Affairs (VA), Defense (DoD), and Education (ED) to better protect servicemembers, veterans, and their family members who are attending college. We’ve signed an agreement to carry out a comprehensive strategy to strengthen our enforcement and compliance work.

This new agreement is part of a larger effort to prevent abusive and deceptive recruiting practices by schools serving servicemembers, veterans, spouses and other family members. This includes working to ensure that these servicemembers and others have the right information to make informed choices with their education benefits and that colleges are providing these students high-quality academic and student support.

Our agreement requires the agencies to:

  • Have a point of contact for sharing information
  • Share complaints about schools
  • Alert each other of suspected fraud, deception, or misleading practices; and/or
  • Notify each other of any agency action that could lead to a college’s loss of eligibility, a suspension of enrollment, or a termination of license

Before this agreement, an agency could have been looking into a particular school or even taking away the school’s eligibility for federal funds without the other agencies knowing about it. Now, we have a system for sharing important information and coordinating efforts.

Recently, we also worked with VA, DoD, and ED to launch an online student complaint system. Here, students can report negative experiences at schools and training programs. The complaints are forwarded to schools and also shared with other law enforcement agencies. The student complaint system has already received over two thousand complaints.

We look forward to even more successful work together in the future.

Closing the book on Colfax

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Today, we announce an enforcement action against Colfax Capital Corporation and its subsidiary Culver Capital, LLC for engaging in unlawful lending practices that targeted and financially harmed servicemembers.

Although the name Colfax Capital Corporation might be new to some, this is actually the last gasp of a chameleon-like company with a long and deplorable record of preying on servicemembers.

Formerly known as Rome Finance Co. Inc. and Rome Finance Company, LLC (collectively Rome Finance), this unlicensed lender provided financing that merchants, such as SmartBuy, used when selling products to military members. Rome Finance’s contracts inflated the disclosed prices of the products to hide the true finance charges that the servicemembers would have to pay, typically by military allotment. This trapped servicemembers in contracts that generated millions of dollars for the company and substantial debt for its customers.

Background on the company’s actions

Rome Finance first came to our attention on Veterans Day 2010, when SmartBuy, Rome Finance and other affiliated finance companies operating in New York were sued by NY Attorney General Eric Schneiderman for unlawful practices that targeted soldiers at Fort Drum. A subsequent review of complaints submitted to the Federal Trade Commission’s Consumer Sentinel Network, our consumer complaints, and an investigation by AG Schneiderman’s office revealed that military members were also targeted in California, Tennessee, Colorado, Georgia, North Carolina, Oklahoma, Texas, and even overseas. The NY suit led to approximately $13 million dollars in fines and settlements.

The NY suit was actually not the first time Rome Finance had been called to account for its unlawful practices. Tennessee Attorney General Robert Cooper had brought suit in 2005 against Rome Finance and an affiliated company called Britlee Inc. for unlawful practices that targeted servicemembers near Fort Campbell Army post through their The Military Zone and Laptoyz Computers and Electronics stores. The TN lawsuit also resulted in a multi-million-dollar judgment against Rome Finance and its network of companies.

What it means for impacted consumers

Although Rome Finance was able to continue doing business for some time by filing for bankruptcy, changing its name to Colfax Capital Corp. and Culver Capital, LLC and employing other evasive maneuvers, I am happy to see that we can finally close the book on Rome Finance in all its forms, and see that they never receive another penny from servicemembers.

Since the company is being liquidated in bankruptcy, Colfax does not have enough money or assets to pay back consumers affected by its actions. Instead, consumers will no longer have to pay on the more than 17,000 outstanding finance agreements, amounting to a total of about $92 million in debt relief for consumers. If you have outstanding finance agreements with Colfax should stop making payments immediately and turn off any allotments that were set up to make these payments. The Bankruptcy Trustee will also notify the credit reporting bureaus that consumers’ contracts with the company should be treated as “paid as agreed,” which could potentially help consumers’ credit scores. Also, if you had default judgments against you, you can apply for the judgments to be vacated. If you have questions about how to do this, check with your JAG or the Attorney General’s office in your state.

Defend yourself from deceptive practices

The sad truth is that Rome Finance was not the first and will not be the last company to financially prey on the military community. Servicemembers, veterans and military families need to actively guard themselves against bad business practices and financial scams.

Make sure you know the total price of the product you’re buying, including interest and fees for your loan, not just the monthly payment! Use available resources like your installation Personal Financial Manager, JAG or legal aid office, your state’s Attorney General office, the Better Business Bureau, and even the internet to research the contract terms and company. Demand to take a copy of the sales contract to a financial or legal professional for review before you enter into it. And if the company will only take payments by military allotment, ask why. That could be a red flag.

Federal and state officials worked in this case to protect you, but remember that you are your own most important first line of defense when it comes to consumer financial decisions!

Join us for a forum to discuss consumer issues for veterans

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We’re hosting an online forum on veteran consumer issues on Friday, May 9 at 2 p.m. EDT.

The event will focus on common consumer issues for veterans and military retirees. Highlights will include a review of tools that can help veterans capitalize on key benefits and information that can help them avoid consumer scams.

Whether you’re a veteran or if you work with veterans or military retirees, you can join us online and watch the event.

Register to join us on Friday, and watch the event live.

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.