Ensuring servicemembers can protect themselves from unlawful financial practices

The Servicemembers Civil Relief Act was passed by Congress to enable servicemembers to devote themselves to the defense of the Nation by providing them key protections. This law’s important provisions include the right to reduced interest on certain loans and shielding servicemembers from foreclosure while they are serving the nation.

In an ongoing case, Citibank has been sued by servicemembers on behalf of themselves and a class of similarly situated people who claim that the bank violated the Servicemembers Civil Relief Act. Four servicemembers say that Citibank charged them and many other active duty servicemembers too much interest on their credit card debt during their military service. Rather than responding on the merits of the servicemembers’ claim, Citibank is fighting their ability even to bring a lawsuit. Citibank is arguing that the servicemembers’ credit-card agreements require them to arbitrate their class claims instead. Last year, a federal judge ruled that the servicemembers are in fact entitled to have their class claims heard in court. Citibank didn’t accept that decision, as it is now appealing the judge’s ruling. And a coalition of businesses — led by the Chamber of Commerce, American Bankers Association, and American Financial Services Association — have sided with Citibank against the group of servicemembers alleging that Citibank broke the law while they were serving their country.

Yesterday, the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) filed a brief in this case to help ensure that servicemembers can protect themselves from practices that violate the Servicemembers Civil Relief Act. The brief argues that the judge was correct: the Servicemembers Civil Relief Act plainly says that servicemembers can bring lawsuits in federal court on behalf of a class to protect themselves from financial institutions that violate that law, regardless of any previous agreement calling for arbitration. Congress clearly intended for financial institutions like Citibank to face servicemembers in court when they join together as a class to allege violations of a law that was designed to allow them to focus on serving their country.

The case is Espin v. Citibank, N.A., No. 23-2083 (4th Cir.).

Read DOJ and CFPB’s amicus brief.

If you are a servicemember who has had a problem with a financial institution, you can submit a complaint with the CFPB.