The CFPB has issued its third snapshot of complaints received from servicemembers, veterans and their families (“servicemember complaints”). The report covers complaints received from July 21, 2011 through December 31, 2014. In 2014, the CFPB received more than 17,000 complaints from such individuals (out of a total of approximately 29,500 complaints received over the entire period covered).
The report describes the types of servicemember complaints the CFPB has received, and for each type of complaint, discusses the issues most commonly involved. The report indicates that debt collection complaints are the largest category of servicemember complaints, comprising 39 percent of total complaints. The next two largest complaint categories are mortgages and credit reporting, comprising, respectively, 24 and nine percent of total complaints. With regard to student loan complaints, which comprise three percent of the total, the CFPB notes that it continues to see complaints from servicemembers about not being provided their Servicemembers Civil Relief Act rights.
The report discusses three enforcement actions that focused on practices affecting servicemembers and resulted in more than $94 million in refunds and other relief.
In a special section entitled “Spotlight on a financial concern associated with military life: The difficulty of managing accounts,” the CFPB highlights servicemember complaints involving bank account and credit card fees and servicing issues. With regard to fees, the CFPB characterizes the complaints as illustrative of the difficulty faced by servicemembers in avoiding fees because of their military service. As an example, the CFPB cites complaints about monthly fees for “misuse” such as not keeping a minimum balance or not performing any transactions in a monthly period. Another example cited by the CFPB is “misuse” following changes to account terms, such as the conversion of no-fee accounts to accounts with fees, of which servicemembers were unaware because of the trouble they experience in receiving notices.
With regard to servicing, the CFPB discusses complaints about communication difficulties encountered by servicemembers in attempting to resolve fee issues. For example, the CFPB cites a complaint from a servicemember who was unable to communicate with his bank because he could not access a telephone and could only access e-mail which did not reach bank representatives with authority to resolve his problems.
The CFPB also discusses complaints involving difficulties faced by military spouses in attempting to access accounts while a servicemember is on active duty, even where the servicemember claimed he or she contacted the bank prior to deployment to authorize the spouse to access the account. Complaints about difficulties faced by spouses attempting to use powers of attorney are also discussed, with the CFPB noting that such complaints indicate that “confusion about companies’ POA requirements has led to an exacerbation in fees and overall financial stress for many servicemembers and their families.”
To address these complaints, the report includes a list a “suggested practices.” According to the CFPB, a company should:
- Attempt to obtain an updated mailing address from military customers before changing terms of military-specific accounts
- Provide clear instructions on how to provide account access to someone designated by the servicemember and the actions that person can and cannot take as to the account
- Proactively notify military consumers about POA company policies, including providing on the company’s website any specific format or language it requires for a POA
- Ensure feasible communication methods for all consumers, with the CFPB noting that limiting communication to telephone or fax for military consumers greatly impacts their ability to conduct bank business particularly if communication is limited to business hours.
While framed as “suggested practices,” banks and other companies serving military customers should expect CFPB examiners to measure their practices against the CFPB’s suggestions in evaluating whether they have proper procedures and protections in place for military customers.