WASHINGTON, DC – In an effort to better protect members of the military and their families from abusive financial practices, U.S. Senator Jack Reed (D-RI), along with U.S. Senator Sherrod Brown (D-OH), and several of their colleagues, are introducing the Military Consumer Enforcement Act.  This legislation would empower the Consumer Financial Protection Bureau (CFPB) to oversee and enforce compliance with certain existing provisions of the Servicemember Civil Relief Act (SCRA).

The SCRA was designed to ease financial burdens on servicemembers during periods of military service.  For example, the SCRA includes provisions that prohibit the eviction of covered military members and their dependents from rental or mortgaged property, and the law caps interest at 6% on debts incurred prior to an individual entering active duty military service.

Despite these SCRA protections, which Congress enacted to enable servicemembers to “devote their entire energy to the defense needs of the nation,” enforcement of this critical law has been inconsistent and subject to the discretion of financial regulators.  Without a change in the law, SCRA enforcement will continue to be subject to the changing priorities of financial regulators.  Prioritizing the consumer protection of our servicemembers should not be discretionary.  It should be mandatory, and the Reed-Brown Military Consumer Enforcement Act would ensure that SCRA enforcement will be a permanent priority for the CFPB.

“Due to the challenges that our troops and their families face, they deserve a strong consumer watchdog to look out for their best interests and financial well-being.  To support servicemembers and their families, we need a strong and independent Consumer Financial Protection Bureau.  That is why I am introducing this legislation – to further strengthen the CFPB’s ability to protect our servicemembers and their families,” said Senator Reed, a former Army Ranger, a senior member of the Banking Committee, and the Ranking Member of the Armed Services Committee.   “Military readiness goes hand in hand with strong consumer protections.  Our forces on the front lines must be able to focus on the mission at hand without having to worry about financial problems or scams back home.  I helped create the Office of Servicemember Affairs at the CFPB so that military families would have someone to turn to and a place that could assist them with financial questions.  Giving CFPB the authority it needs to enforce existing Servicemembers Civil Relief Act safeguards, such as not overcharging our servicemembers, is a smart, logical step.”

“Instead of weakening protections for the men and women who serve our country, we should be strengthening them –that’s what the Military Consumer Enforcement Act will do,” said Senator Brown.  “The CFPB is servicemembers’ cop on the beat, and we need to give it the tools it needs to protect the men and women who have sacrificed so much for our country.”

Reed wrote the law creating the Office of Servicemember Affairs at the CFPB to serve as an independent watchdog for military personnel.  The office, which is headed by Colonel Paul Kantwill (U.S. Army, Retired), focuses on consumer financial challenges affecting servicemembers, veterans, and their families.  It empowers servicemembers through financial education, while also monitoring complaints submitted by consumers to the CFPB, and coordinating with other federal and state agencies on military consumer protection measures.  Mr. Kantwill joined the CFPB after a 25-year military career with the U.S. Army Judge Advocate General’s Corps, with tours in Afghanistan and the Persian Gulf.  He took over the helm of the organization from Holly Petraeus, who led the Office of Servicemember Affairs as its first leader.

On Wednesday, June 21, Senators Reed and Brown hosted an open tele-conference briefing on the legislation with Mrs. Petraeus and Retired Chief Master Sgt. of the Air Force James Cody, who served as the senior enlisted leader of the Air Force from 2013-2017.

“The CFPB, with its focus on the consumer and an office specifically for servicemembers, is ideally suited to oversee and enforce those parts of the SCRA that concern servicemembers’ finances.  In 6 years, over 29 million Americans have received almost $12 billion in relief thanks to this Bureau that is there to see that they are treated fairly and legally.  It would be a shame to see its ability to help curtailed by special interests,” said Petraeus.

“The financial readiness of our servicemembers ties directly to military readiness and the ability to respond as our nation calls upon us. In my more than 32 years of service, and certainly the last four years as the 17th Chief Master Sergeant of the Air Force, I’ve seen firsthand how financial situations hurt our readiness, careers, and more over have destroyed lives.  The CFPB, and specifically OSA, have proven they are willing to take on those that prey on those that serve and have committed to the educational literacy of those that serve.  We need them to have the authority and responsibility to champion this effort, and the Military Consumer Enforcement Act will do just that,” said Chief Cody.

Last month, the CFPB’s Office of Servicemember Affairs issued its most recent annual report to address complaints submitted by servicemembers, veterans, and their families.  The report noted that since opening its doors in July of 2011, the CFPB’s Office of Servicemember Affairs has handled 72,000 complaints from members of the military, visited nearly 150 military installations – with an upcoming trip scheduled for Naval Station Newport later this week.  For example, the CFPB has taken action to:

  • Help secure tens of millions of dollars in debt relief for 17,000 servicemembers tricked into taking out high-cost loans for computers, videogames, and other electronics purchased at a chain of mall kiosks near military bases;
  • Shut down a fee scam in which a retail chain called USA Discounters Ltd. charged tens of thousands of service members for protections that were either guaranteed by law or not actually provided; direct U.S. Bank and a partner company to terminate their deceptive marketing of auto and installment loans and return $6.5 million in hidden fees to military borrowers;
  • Order a major national auto lender to return $3.2 million in payments obtained through illegal debt-collection practices, including threats to report servicemembers to their commanding officers;
  • Order Navy Federal Credit Union to pay $28.5 million in penalties and refunds for the use of a variety of illegal debt-collection tactics;
  • Work with the FDIC to provide $60 million in compensation for more than 77,000 service members charged excess interest on student loans by Sallie Mae and Navient; and
  • Help the U.S. Defense Department put teeth into the Military Lending Act, a bipartisan law that set a 36 percent interest rate cap on consumer loans to servicemembers.

The Military Consumer Protection Act is also cosponsored by U.S. Senators Sherrod Brown (D-OH), Jon Tester (D-MT), Dick Durbin (D-IL), Richard Blumenthal (D-CT), Tim Kaine (D-VA), Tammy Duckworth (D-IL), Elizabeth Warren (D-MA), Tammy Baldwin (D-WI), Al Franken (D-MN), Amy Klobuchar (D-MN), Chris Van Hollen (D-MD), Catherine Cortez Masto (D-NV), Bob Menendez (D-NJ), and Mazie Hirono (D-HI).

The bill is also supported by a range of more than 30 organizations representing the interests of servicemembers and their families, including: National Military Family Association, Military Officers Association of America, Veterans Education Success, Student Veterans of America, Consumer Federation of America, Americans for Financial Reform, Public Citizen, the Sargent Shriver National Center on Poverty Law, U.S. PIRG, Consumers Union, National Association of Consumer Advocates, National Consumer Law Center (on behalf of its low income clients), National Community Reinvestment Coalition, Center for Popular Democracy, Alliance for Justice, American Association for Justice, and Center for Responsible Lending.

Specifically, the Military Consumer Enforcement Act would give the CFPB enforcement power over the following SCRA provisions:

  • Section 101. Definitions.
  • Section 106. Extension of rights and protections to reserves ordered to report for military service and to persons ordered to report for induction.
  • Section 107. Waiver of rights pursuant to written agreement, which excludes bailments.
  • Section 108. Exercise of rights under the SCRA not to affect certain future financial transactions, which excludes insurance.
  • Section 201. Protection of Servicemembers against default judgments, which excludes child custody proceedings.
  • Section 207. Maximum rate of interest on debts incurred before military service.
  • Section 301. Evictions and distress.
  • Section 302. Protection under installment contracts for purchase or lease.
  • Section 303. Mortgages and trust deeds.
  • Section 305. Termination of residential or motor vehicle leases.
  • Section 305(A). Termination of telephone service contracts.