Friday, March 21, 2014
Debt Collection Complaints by Military Members and Veterans Skyrocket
Posted by Charleston Voice
Friday, March 21, 2014
Federal law prohibits credit card companies and debt collectors from harassing military personnel and their families, and yet the government’s new consumer protection agency is being flooded with complaints about this very problem.
The Consumer Finance Protection Bureau (CFPB) says it received more than 14,000 complaints from military members in just over two and half years (July 2011 to February 2014).
Among the complaints were 4,700 about mortgages, 3,800 regarding debt collection, 1,700 on credit card issues, and 1,500 pertaining to banking services.
There were also complaints regarding credit reports (1,200), consumer loans (600), student loans (400), and payday loans (100).
The overall complaint volume from military people skyrocketed 148% from 2012 to 2013, the agency said in its report (pdf).
“I have heard in my many visits to military installations across the country about aggressive and deceptive tactics by debt collectors specifically targeting members of the military,” Holly Petraeus, the CFPB’s assistant director for service member affairs, wrote in an introduction to the report.
“These tactics to coerce payment often involve contacting a service member’s military chain of command, threatening punishment under the Uniform Code of Military Justice, threatening to have a service member reduced in rank, or threatening to have a service member’s security clearance revoked,” she stated. In some cases, debt collectors have even threatened military personnel with court-martial.
Under the Service Members Civil Relief Act, members of the armed services receive special deals and protections while on active duty. These include delaying mortgage payments, not being foreclosed on, and receiving reduced interest rates on credit cards.
But the sheer number of complaints filed with the CFPB demonstrates that many lenders and other financial operations are disregarding federal law and are actually targeting military personnel.
Recent violators of these laws include such prominent companies as Bank of America, which is paying $37 million to service members subjected to illegal foreclosures, and Capital One, forking out $12 million to settle a lawsuit for similar violations.