Senate Hearing Reviews Financial Protection Laws for Service Members and Veterans

money in a pileOn July 31, 2013, the Senate Committee on Veterans’ Affairs held a hearing to discuss financial protections and potential abuse of veterans and service members by large and small institutions and organizations that target these men and women with illegal financial schemes.

A key witness for the hearing came from the Office of Service Members’ Affairs in the Consumer Financial Protection Bureau.  That office’s mission is to work on consumer financial education and consumer-protection for military personnel, their families, and veterans.  The agency reported that within the last six months, the Consumer Financial Protection Bureau received 1,939 complaints related to financial protections of the Servicemembers’ Civil Relief Act (SCRA). 

The SCRA was enacted in 2003 and provides military members certain rights upon being activated for service or upon receiving notice of a permanent change of station.  These protections allow the service members options such as the ability to reduce interest rates on home loans to a maximum interest rate of six percent; the ability to terminate pre-service home and automobile leases; and it requires landlords to obtain court authorization before evicting service members’ families for nonpayment of rent.

Some banks still foreclose on servicemembers and veterans even though they are supposed to be protected by law while serving on active duty.  Some lenders also provide misleading information to the borrowers such as, they must have a letter from their commander to receive protection from the law, or some wrongly request a “certified” copy of their orders to receive the 6 percent cap on their loans.

Another apparent problem is a scam used by groups posing as affiliates with the VA as they target veterans’ retirement pay and pensions.  These groups offer to provide an advanced lump sum of money in exchange for the veterans’ future monthly benefits being turned over to the lender.  Unfortunately, their offer usually amounts to pennies on the dollar.  Committee Chairman Bernie Sanders (I-VT) said his office has received numerous complaints from veterans about scammers calling their homes and claiming to be from the VA and targeting their pension checks. 

A witness from the Department of Defense (DOD) said they are updating and expanding their consumer training for new members, as well as men and women that have been in the service for years.  Most active duty personnel and military veterans know very little about their protections under the federal law or where to turn when they are involved in a transaction that is protected under the laws.  Recently information pertaining to financial protection has been updated and expanded in all versions of the Transition Assistance Program (TAP).

Chairman Sanders concluded the hearing telling members that the Committee will continue its oversight of laws established to protection service members, veterans, and their families.

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    Senate Hearing Reviews Financial Protection Laws for Service Members and Veterans