The Department of Justice and the Consumer Financial Protection Bureau (CFPB) issued a joint letter today reminding auto finance companies of their responsibilities to recognize important legal protections for military families under the Servicemembers Civil Relief Act (SCRA), according to a CFPB press release. While servicemembers have the same rights as non-military borrowers, the SCRA provides additional rights to protect servicemembers and their families against unique financial challenges. Recent CFPB research has shown that servicemembers tend to carry more auto loan debt at younger ages than their civilian counterparts, largely due to the need for transportation while living on a military base. They’re also commonly the target of unfair or predatory practices including costly loans and expensive contracts because of the financial inexperience of many entering the service as young adults, combined with their steady paychecks and ability to structure payments through the military allotment system. CFPB’s Spring 2022 Supervisory Highlights also uncovered unfair acts or practices, prohibited by the Consumer Financial Protection Act, in the auto-servicing industry.
