July is recognized as Military Consumer Month, an annual observance to increase awareness of consumer protections and financial readiness for servicemembers, veterans, and military families. Military families make enormous sacrifices for our nation, but as a result of their service, they often face some unique financial challenges.
Each week in July, the CFPB – in collaboration with the Federal Trade Commission (FTC) and Department of Defense (DoD) – will highlight a key financial topic within the military community. If you’re a servicemember, veteran, or a military family member, we encourage you to share or participate in one of the many free and virtual events scheduled throughout the month.
Week 1: Financial technologies (fintech)
Almost 67 percent of the 1.3 million active-duty servicemembers are under the age of 30. Younger consumers are often more likely to use new and emerging financial technologies, but without knowledge of how to use them safely and effectively, these technologies could have long-term impacts on their financial well-being. If you’ve shopped online recently for clothing or electronics, you may have noticed one of these new payment options at checkout, called buy-now-pay-later (BNPL) credit. During this week, we will highlight BNPL credit and other fintech that impacts servicemembers in the financial marketplace.
Wed., June 30: Facebook Live event
Wed., July 7: Virtual forum on military consumer protection
Week 2: Identity theft and scams
Identity theft is one of the most common problems cited by servicemembers in their complaints to the CFPB. In 2020, the that examined five years of identity theft data, finding that active-duty servicemembers were 76 percent more likely than non-servicemembers to report fraudulent misuse of an existing account, such as a bank account or credit card.
In 2020, the CFPB conducted a sweep of investigations of multiple mortgage companies that used deceptive mailers to advertise VA-guaranteed mortgages. The CFPB began this sweep in response to concerns raised by the Department of Veterans Affairs (VA) about potentially unlawful advertising in the mortgage lending market. More than $4.4 million in civil money penalties was obtained as a result of this sweep. Despite these efforts, however, we continue to hear from consumers about fraudulent calls and mailers from companies misrepresenting themselves as affiliated with the government, their lender, or their loan servicer. As a result, we’re continuing to work closely with the VA and the FTC to monitor VA home loan solicitations and scams. During this week, we’ll also highlight elder fraud to help older veterans and caregivers protect against targeted scams, avoid pension and benefits poaching, and engage in proper financial management.
Tues., July 13: Helping military consumers avoid scams and navigate finances
Week 3: Military Lending Act (MLA) and Servicemembers Civil Relief Act (SCRA)
The SCRA provides powerful legal rights to active-duty servicemembers and their families so that they can focus on accomplishing their military mission. Servicemembers can use the SCRA to reduce the interest rate on pre-service loans to a maximum of six percent. The law allows active-duty servicemembers to terminate residential housing and auto leases without penalty when they receive Permanent Change of Station orders for a period of at least 90 days. It also provides special protections against foreclosure of a home, repossession of property, and against default judgements in civil cases.
The MLA is another federal law that provides special protections for active-duty servicemember by limiting the interest rate that may be charged on many types of consumer loans to no more than 36%. In 2020, the CFPB announced two enforcement actions alleging violations of the MLA. In one enforcement action, the Bureau alleged that an online lender made over 4,000 single-payment or installment loans to over 1,200 covered borrowers in violation of the MLA. A separate action found a different lender violated the MLA’s prohibition against requiring repayment by allotment.
Recently, the CFPB issued an interpretive rule explaining the basis for its authority to examine supervised financial institutions for risks to military borrowers from conduct that violates the MLA. During this week, we’ll highlight several MLA and SCRA resources for servicemembers and practitioners, including tools to help families better understand the types of loans covered under the MLA.
Week 4: Financial repercussions and recovery from COVID-19
Throughout the COVID-19 pandemic, we have provided consumers with up-to-date information and resources to help them protect and manage their finances, including resources for homeowners and renters, and student loan borrowers.
The pandemic could continue to impact the financial marketplace for years to come. During the last week of July, we will spotlight resources to help the military community as they financially recover from the pandemic, including the virtual learning experience, tools for shopping for an auto loan, the importance of credit building to protect and build a brighter financial future, and how to file a complaint when you have a problem with a financial product or service.