On October 28, 2015, the Consumer Financial Protection Bureau (CFPB or the Bureau) finalized an administrative consent order against Security National Automotive Acceptance Company (SNAAC), an auto lender specializing in loans to servicemembers. The order addresses debt collection activity alleged to violate the prohibition on unfair, deceptive, and abusive acts and practices (UDAAP). The CFPB found that the lender's debt collection practices relied on unique elements of military life, including the requirement to remain current on debts, as well as the chain of command and promotion structure.  

The CFPB filed a complaint for injunctive relief in federal court concurrently with its administrative proceeding. On October 26, 2015, the court approved a settlement between the Bureau and the finance company.  

The CFPB alleged that the finance company:

  • Misrepresented potential disciplinary action, including threatening action under the Uniform Code of Military Justice, demotion, loss of promotion, discharge, denial of re-enlistment, loss of security clearance, or reassignment
  • Contacted and threatened to contact commanding officers and suggested that the servicemembers were in violation of military law and other regulations
  • Falsely threatened to garnish servicemembers' wages by threatening to pursue an involuntary allotment before determining whether the servicemember would be sued
  • Misled servicemembers about imminent legal action by threatening such action before determining whether to sue the servicemembers

Under the administrative consent order, SNAAC is required to provide $2.28 million in restitution to affected sericemembers through credits or refunds. According to the order, the amount that each consumer receives will correspond to the amount of debt he or she was allegedly unlawfully pressured into paying. SNAAC must also pay a $1 million civil money penalty to the Bureau. Further, in addition to standard injunctive relief, the CFPB ordered the finance company to provide accurate representations of potential actions, including legal action and wage garnishment – accordingly, such action may not be threatened unless the finance company intends to take it. The order includes servicemember-specific requirements, such as:

  • No contact with commanding officers: The finance company is prohibited from contacting or indicating that it would contact a servicemember's chain of command in order to encourage the servicemember to pay.
  • No debt disclosure: The finance company may not disclose a servicemember's debt to a commanding officer or employer.
  • Accurate representation of potential disciplinary action: The company is prohibited from telling servicemembers that their delinquency or default constitutes a violation of military law or regulation and that not paying could result in negative impacts on such things as their careers or security clearance.