Legislation on the House floor this week is squarely aimed to cripple the Consumer Financial Protection Bureau (CFPB ). The legislation would place service members, veterans and their families in “financial harm’s way,” thereby threatening unit preparedness.
The bill, HR 10, the so-called Financial Choice Act, but more aptly called the “Wrong Choice Act,” rolls back the powers, funding and independence of the CFPB and it also weakens its pioneering Office of Servicemember Affairs.
Debt collection abuses were the leading source (32%) of 44,000 service member complaints to the Consumer Financial Protection Bureau, according to a new report.
The bill also eliminates many other financial system reforms of the 2010 Dodd-Frank Act enacted after the second-worst financial crisis in the nation’s history.
The CFPB has already taken at least 12 major enforcement actions against financial firms targeting young service members.
“Predatory lending affects military readiness. Our forces on the front lines must be able to focus on the mission at hand without worrying about financial scams back home. This report highlights the need for a strong consumer watchdog like the CFPB and its Office of Servicemember Affairs. Our troops deserve someone they can count on to look out for their best interests and help combat scammers that target military families,” said U.S. Senator Jack Reed (D-RI), a former Army Ranger and a member of the Banking Committee who wrote the law creating the Office of Servicemember Affairs at the CFPB.
“The CFPB provides our nation’s service members and veterans a critical resource by holding educational and financial institutions accountable for predatory practices. The VFW commends the CFPB’s Office of Servicemembers Affairs for its work protecting the financial wellbeing of our service members and veterans. Any legislation that would alter the CFPB must ensure these protections remain in place, and not weakened,” said John Towles, Deputy Legislative Director, Veterans of Foreign Wars (VFW).
“The Consumer Financial Protection Bureau is essential for ensuring that American families are not taken advantage of by predatory financial institutions,” said Congresswoman Maxine Waters (D-CA), Ranking Member of the House Committee on Financial Services.
“The Consumer Bureau stands up for servicemembers and veterans who have been shamefully targeted with deceptive practices. It is critical that we have a strong, independent Consumer Bureau in order to protect servicemembers, veterans and their families.”
“This is yet another reminder that servicemembers and Veterans are often targeted by unscrupulous financial services providers, leaving our heroes with mountains of debt and harming military readiness,” said U.S. Senator Tammy Duckworth (D-IL). “The CFPB’s Office of Servicemember Affairs has helped protect those who protect us for years, and now is not the time to rip away vital consumer protections from our servicemembers and Veterans.”
“The Wrong Choice Act is yet another example of Republicans prioritizing Wall Street over hard-working Americans,” said House Democratic Leader Nancy Pelosi. “The CFPB consumer complaint database report makes abundantly clear the danger that this bill poses to the financial security of millions of Americans, including our armed forces. Our men and women in uniform risk and sacrifice everything to defend our nation’s freedom and security. Congressional Republicans’ attempt to dismantle the very protections that keep tens of thousands of service members safe from unfair, abusive and predatory practices in the financial marketplace is utterly unconscionable.”
“From making sure that unscrupulous payday lenders and car dealerships don’t take advantage of young servicemembers fresh out of basic training to ensuring that lenders follow the law as it is written in the Servicemembers’ Civil Relief Act (SCRA) to protect servicemembers during deployments, CFPB Office of Servicemember Affairs has the backs of America’s servicemen and women, and their families.” Michael Saunders, Deputy Legislative Director, The Retired Enlisted Association.
“For years the CFPB has been devoted to protecting members of the armed services, and veterans; we have seen first-hand CFPB’s Office of Servicemember Affairs championing of our military-connected community. The work their office does directly impacts thousands of Americans that would have nowhere else to turn when facing financial harm from some of the worst actors. Servicemembers, veterans and their families have dedicated their lives to our country, and they deserve our gratitude, not attacks from predatory actors-thanks to CFPB, those who have served always have a champion in their corner,” said William Hubbard, Vice President of Government Affairs for Student Veterans of America.
“Our nation’s service men and women should never be targets of consumer fraud. Unfortunately, every day they are targeted by scams and financial abuse. The CFPB is the ‘first line of defense’ in financial security for America’s military community. From day one, the CFPB has fought tirelessly to protect and defend service members, veterans and their families from economic harm and to win financial restitution for them. The CFPB’s work supports the national security by helping service members overcome fraud, retain their security clearances and continue to serve their nation. The CFPB has been a true friend to America’s military,” said Colonel Bob Norton, USA-ret., Veterans Education Success.
“The CFPB strengthens and protects servicemembers, veterans and their families. Through enforcement and its ability to provide restitution for servicemembers who have been wronged, the CFPB creates a fairer, more functional financial system they and all consumers can navigate with confidence,” said Joyce Wessel Raezer, Executive Director of the National Military Family Association.
Among the key findings of the U.S. PIRG Education Fund/Frontier Group report “Protecting Those Who Serve: How the CFPB Safeguards Military Members and Veterans from Abuse in the Financial Marketplace” are the following:
• Debt collection complaints, including illegal threats to contact commanding officers about debts, were the leading source (32%) of 44,000 complaints with military tags published in the CFPB Public Consumer Complaint Database. Complaints about mortgages, credit reporting, and bank accounts were the next leading complaint categories.
• The CFPB has also advocated to strengthen consumer protections for service members, including by successfully advocating the Pentagon to close loopholes in the Military Lending Act, which caps interest rates on loans and provides other protections to service members.
• The CFPB has taken at least a dozen enforcement actions directly protecting service members.
◦ For example, in 2016, the CFPB fined Navy Federal Credit Union $28 million ($23 million in restitution and $5.5 million in civil penalties) for illegal debt collection tactics.
◦ The CFPB took action against two for-profit colleges – ITT Technical Institute and Corinthian Colleges – both of which had been linked to predatory treatment of service members and veterans. The now-defunct Corinthian was ordered to provide $480 million in debt relief to defrauded students, including service members.
◦ In 2013, the CFPB ordered high-cost small dollar lender Cash America to pay up to $14 million in restitution and a $5 million penalty for violations of the Military Lending Act.
• The CFPB provides valuable resources through its Office of Servicemember Affairs, which works full time to help members of the military, veterans and their families avoid bad deals, and find restitution when they are wronged.
The report also includes excerpts from service member complaint narratives. Since the database began accepting these optional narrative stories, about half of complaints include them:
One military consumer complaint, submitted from the area of Akron, Ohio, in August 2015, stated that USA Discounters “added on a warranty and something called debt cancellation program totaling over $1,500. No one explained what the warranty was for or what the debt cancelation was or why I needed it…they have been calling me 2 to 3 times a day hounding me and harassing me for my late payments…In addition, they threatened to contact my chain of command.”
“Predatory lenders cluster their storefronts around military bases, putting their operations in the path of service members and their families,” said Gideon Weissman of Frontier Group, a report co-author. “Not surprisingly, complaints to the CFPB cluster around the bases as well.”
In conclusion, U.S. PIRG Consumer Advocate Mike Litt noted that “The so-called Financial Choice Act is the wrong choice for military families and all consumers because it takes away the CFPB’s tools to protect us, allowing financial predators to run amok.”