126.96.36.199 Servicemembers, Veterans, and Debt Collection
Consumer debt can negatively impact the careers of military personnel and some debt collectors attempt to use this to leverage payments from servicemembers.124 The Consumer Financial Protection Bureau has highlighted a variety of abusive debt collection practices targeting members of the military, such as:
- • Contacting the servicemember’s military chain of command as a way to coerce payment;
- • Putting a clause in the loan contract that the servicemember must grant the debt collector the right to contact the chain of command;
- • Threatening punishment under the Uniform Code of Military Justice, threatening to have the servicemember reduced in rank, or threatening to have the servicemember’s security clearance revoked; and
- • Contacting a spouse after deployment of the servicemember and pressuring the spouse to repay right away without the benefit of communicating with the servicemember, or, in one particularly appalling instance, demanding that the widow of a servicemember killed in combat pay them immediately from the combat death gratuity.125
Approximately two out of every five complaints filed by servicemembers with the CFPB were about debt collection, and servicemembers were more likely to complain about debt collection than all consumers filing complaints at the CFPB.126 Debt collection was the third most common source of complaints to the Federal Trade Commission from servicemembers, their dependents, military retirees, and veterans in 2016.127
In 2015, thirteen percent of servicemember complaints to the CFPB about debt collection focused on medical debt, with complaints originating primarily from veterans.128 Veterans often believed that their health care was covered by VA health insurance, Medicare, or Medicaid and were surprised to later receive debt collection calls.129
Servicemembers often experience extreme stress as a result of debts and debt collection. In a 2013 study, financial stress was found to be the second leading cause of suicide among fifty-seven Army Reserve suicides.130
124 Holly Petraeus, Consumer Financial Protection Bureau, Are unpaid debts a military career-killer? (Jan. 9, 2015).
125 Written Testimony of Holly Petraeus before the Senate Committee on Banking, Housing and Urban Affairs (Jun. 26, 2012). See also Consent Order, In the Matter of Navy Federal Credit Union (Oct. 11, 2016); Consumer Fin. Protection Bur., Servicemembers 2015: A Year in Review (Mar. 2016); Consent Order, In the Matter of Security National Automotive Acceptance Company (Oct. 28, 2015).
126 Consumer Fin. Protection Bur., 50 State Snapshot of Servicemember Complaints: A Nationwide Look at Complaints (Oct. 2017) (39% of complaints by servicemembers, veterans, and their families are about debt collection, compared to 26% of complaints from non-servicemembers); Consumer Fin. Protection Bur., The Office of Servicemember Affairs: Charting our course through the military lifecycle (May 2017) (“As of April 1 2017, the CFPB handled approximately 31,500 debt collection complaints from military consumers, which is 42% percent of the entire servicemember complaint population compared to debt collection complaints from the entire consumer population totaling 27% of the entire consumer complaint population.”).
127 Press Release, Federal Trade Commission, FTC Launches Website Dedicated to New Military Task Force: Agency task force will develop initiatives to empower servicemembers and their families (Sept. 25, 2017).
128 Consumer Fin. Protection Bur., Servicemembers 2015: A Year in Review 9 (Mar. 2016).
130 Timothy L. Hale, Searching for Answers: A Panel Review of Army Reserve Suicides, Double Eagle 6 (Sept. 2014) (study examined primary stressors leading to suicide).