Auto finance companies were sent a joint letter from the U.S. Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) alerting them about the additional protections offered to military families under the Servicemembers Civil Relief Act (SCRA).
While non-military borrowers have the same rights as servicemembers, the SCRA provides additional rights to protect people in the armed forces and their families against unique financial challenges, the CFPB said in a press release on Friday (July 29).
“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 service members and their families are being treated fairly.”
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Those serving in the military tend to carry more auto loan debt at younger ages than civilians, partly because of the need for transportation while living on a military base, the CFPB said, referring to its research.
Servicemembers are also more likely to be targeted by predatory loan practices because they enter the military with financial inexperience while being paid a regular paycheck, the release indicated.
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“The Civil Rights Division is entrusted with the responsibility of ensuring that the rights of the brave men and women of our Nation’s armed forces are safeguarded from discrimination and unfair treatment,” said Assistant Attorney General Kristen Clarke.
“We work every day to ensure that these rights, including those related to auto financing, are protected through litigation, outreach and policy development,” Clarke said.
The letter is intended to ensure that auto finance companies are aware of key provisions within the SCRA, including wrongful vehicle repossessions, vehicle lease termination provisions, interest rate benefits and other details.