Several U.S. Senators have introduced legislation for a Military Consumer Enforcement Act that would seek to empower the Consumer Financial Protection Bureau (CFPB) to oversee and enforce compliance with the Servicemember Civil Relief Act (SCRA). If passed and signed into law, the new act would amend the Consumer Financial Protection Act of 2010.
The SCRA, 50 U.S.C. § § 3901 – 4043, provides a range of civil and financial protections to eligible servicemembers, including capping interest rates, protecting against foreclosure and eviction without a court order, and requiring certain steps to obtain a default judgment against a protected servicemember. The CFPB currently does not have direct enforcement authority over the SCRA but has been indirectly enforcing the SCRA through referrals to the Department of Justice. The CFPB has established the Office of Servicemember Affairs, led by Assistant Director Holly Petraeus, to focus on consumer financial challenges affecting servicemembers, veterans, and their families. The Military Consumer Enforcement Act would give the CFPB enforcement power over 10 key provisions in the SCRA, including protections related to interest rates, foreclosure, eviction, installment contracts (including automobile loans), and default judgments.
Senators Jack Reed of Rhode Island and Charles Schumer of New York are co-sponsoring the act “in an effort to better protect members of the military and their families from abusive financial practices.” According to Wisconsin Senator Terry Baldwin, another co-sponsor, “enforcement of this critical law has been inconsistent and subject to the discretion of financial regulators[,]” and that the proposed Military Consumer Enforcement Act “would ensure that SCRA enforcement will be a permanent priority for the CFPB.” “Our servicemen and women and their families face unique challenges and they deserve strong consumer protections,” said Senator Baldwin. “Our Military Consumer Enforcement Act will ensure that the CFPB has the tools it needs to be able to protect the men and women who volunteer to protect our country.” Senator Reed noted that “[w]ithout a change in the law, SCRA enforcement will continue to be subject to the changing priorities of financial regulators. Prioritizing the consumer protection of our servicemembers should not be discretionary.”
The federation of state Public Interest Research Groups (PIRG) agreed that SCRA protections have been “unevenly enforced” and that “giving the CFPB the jurisdiction over key parts of the SCRA means that the law will actually be enforced.”
Co-sponsored by numerous U.S. Senators, the proposed legislation has the support of over 30 organizations that represent servicemember interests as well. Relatedly, the Department of Justice has also recently increased its efforts towards SCRA enforcement as seen through the DOJ’s Servicemember and Veterans Initiative and SCRA Enforcement Support Pilot Program. More information can be found at http://www.servicemembers.gov/ and www.justice.gov/servicemembers.
The new Military Consumer Enforcement Act legislation, if passed, will spurn increased SCRA-focused exams and enforcement actions.