This week the CFPB issued its third complaint report detailing the trends surrounding complaints submitted by or on behalf of service members, veterans and their families.  The report highlights the complaints received by the CFPB from service members, the CFPB’s enforcement actions impacting servicemembers and finally, a discussion of the account management issues particular to servicemembers. 

Complaints:

The Report summarizes by product the complaints received from servicemembers.  The majority of complaints received were with regard to debt collection (39%) and mortgage (24%).  The most common type of debt collection complaint reported was about continued attempts to collect a debt that the servicemember contended was not owed.  The CFPB noted that in many of those cases, the attempt to collect the debt is not itself the problem, but rather the calculation of the underlying amount owed.  The Report also placed emphasis on complaints about debt collectors calling places of employment.  “This is of particular interest to the CFPB since we have received reports that some debt collectors are threatening service members by claiming that they will report unpaid debts to their commanding officer, have the servicemembers demoted in rank, or even have their security clearance revoked if they don’t pay up.” A Snapshot of Complaints Received from Servicemembers, Veterans, and their Families (Spring 2015) at  p. 9.

Enforcement Actions:

The Report highlights the CFPB’s three public enforcement actions in 2014 which were impactful for servicemembers.  These enforcement actions provided servicemembers with $94 million in refunds and other relief.

Identified Issues Particular to Servicemembers:

The most significant portion of the Report is its discussion of issues particular to servicemembers: account management.  The Report identifies account management as a common thread in many of the complaints that it received.  The Report identified two specific areas of concern:

1.  Monthly Fees for “Misuse.”

The CFPB defines “misuse” broadly as implying a consumer has not kept the necessary minimum daily balance, not set up a direct deposit required by the terms of the account, or not had the requisite activity on the account necessary to prevent fees.  The CFPB noted that the issue frequently stems from the bank’s change of terms and conditions.  While the account may have initially been opened as a Military No-Fee account, the account may have been changed to a new product requiring a minimum balance or automatic deposit in order to avoid new monthly changes.  The CFPB noted that because of the unique nature of military life (frequent deployments and moves, etc.), many servicemembers may not receive the change of terms and conditions sent by the bank and therefore were caught unaware of the change in requirements. The CFPB also noted that because of frequent deployments, accounts may remain dormant for periods of time resulting in a dormancy/inactivity fee being charged.

1. Poor Customer Service Communication Means for Deployed Military

The Report also raised concerns that financial institutions do not have procedures in place to effectively communicate with servicemembers concerning their accounts when they are deployed.   The most expedient manner in which to deal with a complaint or inquiry is via phone; however, in many instances, the deployed servicemember does not have access to a telephone and is therefore relegated to communicating by email or other online systems.  The Report raises concerns that financial institutions are not providing sufficient means to communicate with deployed servicemembers.