All Things FinReg


On March 22, the Consumer Financial Protection Bureau (CFPB) announced on its website that it has issued its annual summary and analysis of the 19,000 complaints it received from servicemembers last year, titled “Servicemembers 2015: A Year in Review.” The CFPB’s report provides aggregate statistics concerning the sources, subject matters, resolutions, and financial products involved in those complaints.

Several issues identified in the report relate to the unique circumstances of servicemembers:

  • The availability of home mortgage loss mitigation options for servicemembers who receive permanent change of station (PCS) orders remains the subject of a significant number of complaints. Federal law does not impose any general affirmative obligation to offer specific loss mitigation options for private mortgages, but CFPB regulations require servicers to accurately and promptly evaluate loss mitigation applications for all options that the servicer and investors make available.
  • A specific complaint claiming that the terms of automobile loans prevented servicemembers from shipping their cars outside the country even when traveling on PCS orders. The report implies a potential interest in evaluating this issue from an unfair, deceptive, or abusive acts or practices (UDAAP) perspective, noting that servicemembers “were often completely unaware of this restriction when they took out the loan.”
  • A number of servicemembers complained about creditors’ and reporting agencies’ handling of identity theft while on active duty. By contrast to the other issues, the report implied that this problem could be addressed through consumer education: servicemembers already have the right to place an “active duty” alert on their accounts to help protect against identity theft in this scenario.

Other issues noted, however, are of general concern:

  • Debt collection from servicemembers was a key focus of the report. By far the largest category of complaints—representing just under half of all servicemember complaints the CFPB received—related to debt collection. The next largest category, mortgages, represented only 15% of servicemembers’ complaints. The issues paralleled those reported by the general population: the principal basis of servicemembers’ complaints was that the amount the collector claimed as due was inaccurate. The CFPB separately analyzed all debt collection complaints and identified similar patterns in its 2016 Fair Debt Collection Practices Annual Report, also released on March 22.
  • Bank account fees were a significant source of complaints. Servicemembers complained about recurring, service-related, and penalty fees and account balance management issues. The CFPB recently highlighted similar issues in its November 2015 complaints report.
  • Introductory rates on credit cards also prompted a number of complaints. The report calls out the specific practice of retroactively applying an interest rate to a promotional balance as the source of a number of complaints. As the report explains, servicemembers complained about credit cards offering a promotional 0% interest rate but then—consistent with the disclosed terms of the credit card—claiming as due interest on the entire original balance retroactive to the date the charge was incurred, if the balance was not paid in full by the end of the promotional period.

The Servicemembers 2015: A Year in Review report contains few surprises, but discloses some important trends of which financial services providers should take note. The CFPB’s special interest in protecting servicemembers, and its reliance on its analysis of complaint trends to drive the agency’s enforcement, supervision, and regulation programs, are both well-documented. Accordingly, the report has important insights into potential areas of CFPB focus with respect to its servicemember-protection mission in the coming year.