News stories highlighting fines assessed by the U.S. Office of the Comptroller of the Currency or the Department of Justice related to the Servicemember Civil Relief Act are fairly commonplace. For example, we recently outlined OCC and DOJ complaints against Bank of America and student loan servicer Navient.
Tradtionally, OCC and DOJ have exercised jurisdiction over SCRA violations. However, newly proposed legislation, sponsored by Sens. Jack Reed, D-RI, and Chuck Schumer, D-NY, would give oversight to the Consumer Financial Protection Bureau.
This change, if it passes into law, would have a direct effect on debt collectors and other institutions seeking to comply with the SCRA’s requirements.
Act’s enforcement currently inconsistent
A driving factor behind the proposed legislation is the inconsistent enforcement of the SCRA. At the moment, it is up to financial regulators, as well as the DOJ, to decide when to bring a case against a violator.
For both sides – debt collectors and service members – this inconsistency is confusing and frustrating. Being able to tell exactly what is a SCRA violation, and what the associated penalty will be, is a significant benefit. This will allow debt collectors to better plan ahead to avoid SCRA issues, and it will provide service members a peace of mind knowing that their rights are protected and defended.
The idea behind the legislation is that additional oversight, this time from the CFPB, will ensure a more consistent, fair enforcement of the SCRA. This point was emphasized by Reed, a former military member and a part of the Senate Banking, Housing and Urban Affairs Committee.
“Our troops and their families deserve a strong consumer watchdog that will look out for their best interests and financial well-being,” he explained. “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.”
Bill would offer more power to CFPB watchdog.Law would enable CFPB ‘watchdog’
The crux of the law, titled the “Military Consumer Protection Act,” centers around the watchdog department within the CFPB: The Office of Servicemember Affairs. The purpose of this group would shift to include oversight for the SCRA and ensure fair, consistent enforcement.
“Strengthening the CFPB’s ability to enforce protections for former and current service members and their families is an important step in our efforts to safeguard Americans’ financial well-being,” added Schumer.
Currently, the legislation is awaiting review from the Senate Banking, Housing and Urban Affairs Committee. After that, it will move to the full Senate and the House of Representatives.
“Proposal is the soldier for the SCRA’s weapon.”
Legislation reinforces law
According to Schumer, the current SCRA law is plenty to protect service members. Where the government comes up short, however, is in enforcement. That would change if his legislation is passed into law.
As reported by New York-based media outlet the Watertown Daily Times, Schumer feels that violations are being missed due to a lack of proper oversight.
“To borrow a military phrase, ‘What good is an arsenal of weapons if there are no soldiers to wield them?'” Schumer explained, according to the Watertown Daily Times.
The Military Consumer Protection Act would be those soldiers, in Schumer’s metaphor. According to Reed’s office, the CFPB’s Office of Servicemember Affairs heard more than 17,000 complaints in 2014 alone from service members, veterans and family members related to SCRA violations. The end result of these complaints was more than $94 million in refunds.
It would appear that a dedicated watchdog group with more power over the SCRA would be able to enforce more complaints on a yearly basis. For debt collectors, the end result will ideally be consistent rulings on SCRA violations. No matter the legislation’s fate, the best line of defense today is knowledge. Service members are protected while on active duty, so knowing if and when their tour started will ensure no violations are committed.