|August 26, 2014|
Previously published on August 20, 2014
On August 14th, the CFPB entered a consent order with a company that operates a chain of consumer retail stores located mainly near military bases. The company also finances the sale of the goods. The CFPB alleges that the company engaged in unfair and deceptive practices by selling servicemembers, as a benefit, a legal protection that they were otherwise already guaranteed under the Servicemembers Civil Relief Act (SCRA). Under the SCRA, active duty servicemembers are provided with various consumer protections. Among them is a protection that permits courts to delay lawsuits if the court finds that the servicemember's military duty inhibits his ability to defend himself. A party seeking to obtain a default judgment against a servicemember must determine whether the service member is on active duty and thus unable to appear in the case.
The Consumer Financial Protection Bureau (CFPB), created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, implements and enforces federal consumer financial law. Greenberg Traurig monitors the CFPB's activities, including the almost daily movement on multiple industry fronts that the CFPB makes as it redefines consumer finance law. An entirely new system has been and is being created for the consumer financial services industry. Once complete, the question will be, "How does our clients’ business match up?" Our GT CFPB Team regularly observes and analyzes the actions of the CFPB in order to advise clients in best practices, risk management and compliance procedures.
According to the consent order, the company deceptively marketed and sold this legal obligation as a service to servicemembers. Under the terms of the consent order, the retailer must refund more than $350,000 to servicemembers that paid these fees. In addition, the retailer is subject to an additional $50,000 civil money penalty.