The Consumer Financial Protection Bureau (CFPB) recently reported that it has received over 400,000 complaints from service members, veterans, and their dependents since opening its doors. The CFPB opened its doors in July 21, 2011.
In 2023, the CFPB saw a 27% increase in complaints from 2022 and a 98% rise compared to 2021. These complaints range from financial fraud to credit reporting errors.
Each case represents a financial issue of a service member, veteran, or dependent who couldn’t resolve their problem with the respective company. That’s why they turned to the CFPB for support.
How the CFPB Helps Service Members
The CFPB takes action to support the law, including the Servicemembers Civil Relief Act (SCRA), and works to provide systemic solutions for protected persons. According to the CFPB, service members aren’t getting the interest rate reduction they earned and deserved.
The SCRA stipulates that active duty service members, including Reservists and Guard, are granted a 6% interest reduction for debt incurred before active duty service.
With most interest rates above 6% nowadays, plenty of active duty service members can benefit tremendously from this particular SCRA benefit.
For example, a Reservist called to active duty can save as much as $5,670 per activation on a mortgage with a 7.5% interest rate.
Unfortunately, many eligible service members have had problems obtaining this interest rate reduction over the years.
According to a 2022 report, the CFPB saw that among the Reserve and National Guard members eligible for SCRA protection, less than one out of ten with eligible auto loans were able to obtain interest rate reduction.
Moreover, only 6% with eligible personal loans were able to claim the reduction between 2007 and 2018. Failure to claim these reductions caused $100 million in foregone savings.
As a response, the CFPB pointed to straightforward solutions such as ensuring that financial institutions apply the interest rate reduction across all eligible accounts even if the service member doesn’t invoke their SCRA benefits.
The CFPB is also actively looking for ways to automate this interest rate reduction, which has already been successful among student loans where eligible service members get automatic interest rate reductions.
The CFPB admitted that some cases required the assistance of other agencies. The CFPB routes the complaint to the appropriate office for help.
When financial institutions engage in practices that harm service members protected by the SCRA, the CFPB can take action to hold them accountable. The CFPB has been instrumental in 42 cases involving harm to service members, which resulted in $183 million in redress for the victims.
In cases where the company that harmed the service member went out of business, the CFPB provides assistance through its relief fund. The relief fund was approved by Congress and has provided over $1.2 billion in relief for service members who otherwise wouldn’t have been compensated for their losses.
Providing proof of one’s active duty status is vital to honor SCRA protections. This is where the SCRACVS can help service members claim their rights.