The Department of Justice and the Consumer Financial Protection Bureau (CFPB) recently issued a joint letter reminding auto lenders and leasing companies of their responsibilities to recognize important legal protections that exist for members of the military and their dependents under the Servicemembers Civil Rights Act (SCRA).
Under the SCRA, servicemembers have additional rights and protections given the unique financial challenges that often emerge because of their service.
July is Military Consumer Month, which is dedicated to raising awareness of consumer protections and promoting financial readiness for servicemembers, veterans and their families.
“Auto finance companies that play by the rules should not be disadvantaged by competitors that violate the legal rights of military families,” said CFPB Director Rohit Chopra. “The CFPB is closely monitoring the auto finance industry to ensure that servicemembers and their families are being treated fairly.”
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.
Servicemembers are also the common 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.
The letter is designed to ensure that auto finance companies are aware of key provisions within the SCRA that protect servicemembers and their families against certain unlawful auto financing practices.
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