Introduction

Holly Petraeus, CFPB’s top official for military issues, with Elizabeth Warren, who championed the bureau and was later elected to serve in the U.S. Senate. Defense.gov

Debt collectors are targeting members of the Armed Services by calling their superior officers, threatening reduction in rank and even courts-martial, despite stepped-up efforts to protect them from abuse, according to a government report issued last week.

“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,” said Holly Petraeus, assistant director for service member affairs at the Consumer Financial Protection Bureau.

Petraeus, in a letter accompanying the report, said the “sheer volume of debt collection complaints alone” makes the issue important to her office.

While all Americans are covered by laws barring debt collectors from overly aggressive or deceptive tactics, military members and their families are supposed to receive additional consideration, including protection from foreclosure while deployed, tricky high-rate loans and other financial pitfalls.

That’s because they face particular financial challenges: they relocate frequently, deploy overseas and often are targeted by scammers promoting rip-off deals, officials and advocates say.

Yet military members routinely are denied their additional legal protections, Petraeus’ office found.

Among those protections, it is illegal to foreclose on deployed military personnel, or to charge service members interest rates above 36 percent on high-cost loans including payday loans, car title loans and tax refund advance loans.

The rules aim to prevent service members from being hurt financially because of their decision to serve.

Under a law called the Service Members Civil Relief Act, people entering active duty can have interest rates on credit cards, student loans and mortgages reduced to 6 percent. They can cancel auto leases without incurring penalties, put mortgage payments on hold temporarily and have extra tools to prevent foreclosure while they are deployed.

Federal law enforcement authorities have pursued several big-name violators of these laws in recent years. Bank of America is paying out $37 million to people who were foreclosed on illegally under a 2011 agreement with the Justice Department. In 2012, Capital One Financial Corp. agreed to pay $12 million to settle a DOJ lawsuit involving similar alleged violations.

The new CFPB report noted that the agency has recovered more than $1 million for veterans and service members who were mistreated by mortgage companies, debt collectors and payday lenders. Yet it said companies continue to violate the SCRA and other protections against financial abuse.

The crackdown is being coordinated by the Financial Fraud Enforcement Task Force, a group set up initially to go after the perpetrators of the financial crisis. The task force separately has been scrutinizing banks that help fraudulent businesses debit people’s accounts illegally, the Center reported last year.

The new details come from the CFPB’s second summary report on complaints filed by military consumers from every state, rank and branch of the Armed Services. The new data were culled from 14,100 complaints submitted by military families through the agency’s consumer complaint portal, Petraeus said.