The CFPB is protecting the military community and providing relief

Complaints to CFPB from servicemembers, veterans, and their families just crossed the 400,000 mark. Last year, the CFPB saw total complaints from the military community increase by 27% from 2022 and 98% compared to 2021—with complaints ranging from credit reporting errors to mortgage problems to financial fraud and scams.

Each of these complaints represents a financial issue that a servicemember, military family member, or veteran could not get resolved with the respective company, so they turned to the CFPB for help. When banks and financial institutions flout consumer or military financial protections, the CFPB acts to ensure companies are held responsible. CFPB also conducts research to better understand the issues consumers raise and to identify potential solutions.

How the CFPB helps servicemembers get the financial protections they have earned

The application of interest rate protections under the Servicemembers Civil Relief Act (SCRA) is an important example of CFPB’s work to assist individual consumers and look for systemic solutions. As CFPB reviews complaints and looks for patterns and trends, we continue to hear from servicemembers that they are not getting the military interest rate reductions they have earned and deserve. Under the SCRA, active duty servicemembers, including activated Guard and reservists, can request an interest rate decrease to 6% on loans they took out before active duty.

With current interest rates on car loans and even mortgages well above 6% for many borrowers, more servicemembers would now benefit from a reduction than in prior years. The savings can be considerable. For example, a member of the National Guard or Reserves could save as much as $5,670 per activation on a mortgage with a 7.5% interest rate. An active-duty servicemember starting a four year enlistment could save nearly $2,500 on credit cards with a pre-service balance of $3,600 at 28% interest, assuming they continue to make minimum payments. However, problems getting a rate reduction for most types of loans are long running and well documented.

For example, one servicemember recently shared this complaint about their car loan:

I am in the US Army Reserves. I supplied military orders to the creditor, in writing and by email on Aug XX, 2022, Sep XX, 2022, June XX, 2023, and a second set of orders were supplied June XX 2022. There was no action taken to cap my interest rate at 6% per the protections of the SCRA military benefit for reservists being called to active duty service. I supplied multiple examples of SCRA benefits being applied by other creditors, but received no response.

Another servicemember shared this complaint about their credit card:

I am an active duty service member and I should be receiving 6% interest rate from [company] under the Servicemembers Civil Relief Act (SCRA). I send [sic] them my active duty military order in [date] and they still [sic] refusing to reduce my interest rate to 6% although the law says all debt prior to active duty.

Neither servicemember was able to receive their SCRA interest rate reduction or receive a refund on the excess interest they had been charged until they contacted the CFPB about their problem.

CFPB research has helped illustrate just how pervasive these problems are. In a 2022 report, CFPB did a first-of-its-kind analysis that showed that among members of the National Guard and Reserve, fewer than one in ten with eligible auto loans received the interest rate reduction, and only one in six with personal loans received a reduction between 2007 and 2018. In total, those failures represented $100 million in foregone savings. CFPB pointed to straightforward solutions to these issues, like ensuring that banks apply interest rate reductions across all eligible accounts they hold even when the servicemember invokes protections for a single account or finding ways to automate the application of interest rate reduction benefits. Automation has already proven successful for federal student loans: while recent interest rates for federal student loans currently range from 6.5% to over 9%, eligible servicemembers will automatically get SCRA rate reductions.

Sometimes a servicemember’s financial problem requires the attention of another agency. When this happens, CFPB routes the complaint to the right place to get those problems resolved. For example, we refer possible SCRA violations to the U.S. Department of Justice , which can enforce this important military protection in court. Since 2011, we have referred more than 73,000 complaints from the military community to other agencies, including problems with identity theft, financial fraud, or other issues. The CFPB is also working with the Biden Administration’s Veteran Scam and Fraud Evasion Task Force so no matter where or how a servicemember submits a complaint, it ends up in the best place to get the problem addressed.

The CFPB provides much-needed relief to servicemembers when they are harmed

When banks and financial institutions engage in practices that financially harm servicemembers, the CFPB can take action to hold those companies accountable. In total, the CFPB’s enforcement actions in 42 cases involving harm to servicemembers and veterans has delivered $183 million in redress to victims. These actions include six enforcement actions for violations of the Military Lending Act, a critical protection for members of the military against predatory loans. Two additional cases involving allegations of Military Lending Act violations—against FirstCash and MoneyLion —are currently pending in court.

When servicemembers are harmed by companies that have gone out of business or where the company involved is unable to provide compensation, the CFPB’s victims relief fund makes sure people can still get relief. In the time since the fund was established by Congress, it has paid out more than $1.2 billion in relief to people who otherwise would not have been compensated for their losses. This includes over $3 million paid to nearly 2,000 people with overseas military addresses in addition to relief paid to servicemembers living on U.S. military installations or in off-base housing.

The CFPB will continue to work with all our partners as the financial marketplace evolves so we can understand the unique needs and challenges of members of the military community and enforce the law when necessary. If you have a problem with a financial product or service, submit a complaint to us, and we will work to get you a response.