Washington, D.C. – This week, U.S. Senator Catherine Cortez Masto (D-Nev.) cosponsored legislation to strengthen consumer protections for servicemembers and their families. The Military Consumer Enforcement Act, sponsored by U.S. Senators Jack Reed (D-R.I.) and Sherrod Brown (D-Ohio), would authorize the Consumer Financial Protection Bureau’s (CFPB) Office of Servicemember Affairs to oversee enforcement of financial protections outlined in the Servicemember Civil Relief Act (SCRA).
Congress implemented the SCRA to protect active duty military members and their families from financial issues ranging from mortgage foreclosure to eviction so they could focus on their active duty responsibilities. However, enforcement of the law has been inconsistent, leading many military members and their families to struggle with predatory financial practices – which hurt servicemembers and undermine military readiness. The legislation would enable CFPB’s Office of Servicemember Affairs to independently enforce certain sections of the SCRA and act as a watchdog to protect servicemembers and their families.
“There is no doubt our servicemembers and their families warrant the greatest level of support from Congress, which is why I am proud to cosponsor this bill,” said Senator Cortez Masto. “This vital legislation will ensure that the men and women in uniform and their dependents have financial security and adequate protections from financial predators so they may fulfill their service with peace of mind.”
CFPB’s Office of Servicemember Affairs has handled more than 70,000 complaints from servicemembers and provided financial education at 148 military facilities nationwide. Since opening its doors in 2011, the CFPB has returned nearly $12 billion to the pockets of 29 million Americans who have been cheated by unscrupulous debt collectors, for-profit schools, and payday lenders, according to the agency.
According to the Military Compensation and Retirement Modernization Commission report, financial problems affect readiness. The report estimates that thousands of troops are involuntarily separated from service each year due to financial problems, with associated costs to the military of as much as $57,333 per separation. The cost may be even higher for experienced Non-Commissioned Officers. Additionally, many other servicemembers lose security clearances every year due to personal finance issues, often affecting the mission readiness of their unit. For example, the Commission’s report notes that “in FY 2013, financial issues were the fourth highest-ranking reason for losing security clearances, costing 1,129 military service members their security clearance.”
The Military Consumer Enforcement Act would give CFPB’s Office of Servicemember Affairs jurisdiction over enforcing the SCRA provisions regarding certain financial matters, including:
- Default judgements,
- Interest rate on debts incurred before military service,
- Installment contracts for purchase or lease,
- Mortgages and trust deeds,
- Termination of residential or motor vehicle leases, and
- Termination of telephone service contracts