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 Chuck Schumer (D-NY), and several of their colleagues, are introducing the Military Consumer Protection 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 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 found to be 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-Schumer Military Consumer Protection Act would ensure that SCRA enforcement will be a permanent priority for the CFPB.
“Our troops and their families deserve a strong consumer watchdog that will look out for their best interests and financial well-being,” said Senator Reed, a former Army Ranger and a member of the Banking Committee. “Consumer protection can impact military readiness. Our forces on the front lines must be able to focus on the mission at hand without worrying about financial problems or scams back home. I created the Office of Servicemember Affairs at the CFPB so military families would have someone to turn to with financial questions and a place that could assist them if they need help. Giving CFPB the authority it needs to enforce existing safeguards against things like evictions, default judgments, and foreclosures is a smart, logical step.”
Reed wrote the law creating the Office of Servicemember Affairs at the CFPB to serve as a watchdog for military personnel. The office, which is headed by Assistant Director Holly Petraeus, the wife of retired General David Patraeus, focuses on consumer financial challenges affecting servicemembers, veterans, and their families. It helps empower servicemembers through financial education, while also monitoring of complaints submitted by consumers to the CFPB, and coordinating with other federal and state agencies on military consumer protection measures.
“Strengthening the CFPB’s ability to enforce protections for former and current servicemembers and their families is an important step in our efforts to safeguard Americans’ financial well-being,” said Senator Schumer. “The men and women who fight to keep our country safe deserve an agency that is clearly dedicated and responsible for upholding the protections of the SCRA and willing to enforce penalties on those that do not. We must do all we can protect our military from the egregious scams and predatory practices that can destroy their finances.”
In 2014, the Office of Servicemember Affairs received more than 17,000 complaints from servicemembers, veterans, and their family members and helped provide over $94 million in refunds and relief to servicemembers and their families as a result of following up with needed assistance.
The Military Consumer Protection Act is also cosponsored by U.S. Senators Elizabeth Warren (D-MA), Mark Warner (D-VA), Jeff Merkley (D-OR), Richard Blumenthal (D-CT), Al Franken (D-MN), Dick Durbin (D-IL), Tim Kaine (D-VA), Bob Menendez (D-NJ), and Mazie Hirono (D-HI).
The bill is also supported by a range of organizations representing the interests of servicemembers and their families, including: the Consumer Federation of America; the National Guard Association of the United States; the National Association of Consumer Advocates; the National Military Family Association; the Military Officers Association of America; and U.S. PIRG.
Specifically, the Military Consumer Protection Act would give the CFPB enforcement power over the following SCRA provisions:
Section 101. Definitions.
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.