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CFPB Reports on Servicemembers




by:
Peter L. Cockrell
Greenberg Traurig, LLP - McLean Office

Brett M. Kitt
Greenberg Traurig, LLP - Washington Office

Gil Rudolph
Greenberg Traurig, LLP - McLean Office

J. Scott Sheehan
Greenberg Traurig, LLP - Houston Office

 
March 17, 2014

Previously published on March 13, 2014

On March 6th, the CFPB released its second “snapshot” report of complaints that it has received from military servicemembers, veterans and their families.1 The report covers more than 14,000 such complaints that the CFPB received from July 21, 2011 through February 1, 2014. During that period, most complaints concerned mortgages, debt collection, credit cards, bank accounts and services, and credit reporting. Fewer complaints concerned other categories of consumer financial products, such as payday loans.

Within each category of complaints, the complaint topics varied. Most mortgage complaints pertained to issues such as loan modifications, collections and foreclosures. Most debt collection complaints pertained to persistent attempts to collect debts not owed and aggressive communication tactics. Credit card complaints pertained to a variety of issues, such as billing problems. Almost half of the bank account and service complaints pertained to problems opening, closing or managing accounts. More than 70 percent of credit reporting complaints pertained to incorrect information appearing on consumers’ credit reports.
The report notes that consumers have received more than $1 million in monetary relief in response to their complaints.

The report expresses concern that some military families are not receiving special consumer protections to which they are entitled under federal laws. Specifically, the report expresses concern about the following four areas:

  • Debt collection: Debt collection is the top complaint category for servicemembers. The CFPB is concerned about aggressive and deceptive tactics used by debt collectors against military members.

  • Student loans: The Servicemembers Civil Relief Act (SCRA) provides financial protections to servicemembers, but servicemembers have reported problems obtaining correct and consistent information on available SCRA protections for their student loans. They also report that they are repeatedly and incorrectly asked to submit additional, unnecessary documentation.

  • Payday loans: The Military Lending Act (MLA) prohibits interest rates above 36% on some types of loans, including certain payday loans, to active-duty military, their spouses and dependents. Although the number of payday loan complaints has been relatively small, the CFPB is still concerned that lenders are structuring their products so that they fall outside of the scope of the MLA.

  • Mortgages: Servicemembers have complained that mortgage servicers’ lack knowledge about military-specific programs and that they are unaware of the guidance offered by the CFPB regarding servicemember protections.


1  See the full report http://files.consumerfinance.gov/f/201403_cfpb_snapshot-report_complaints-received-servicemembers.pdf



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Peter L. Cockrell
Brett M. Kitt
Gil Rudolph
J. Scott Sheehan
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Business Law
Finance
 
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