WASHINGTON, D.C. -- Each year, thousands of people throughout the country fall victim to unscrupulous lending practices.
Fortunately for active-duty, reserve component members, and their families, Office of Servicemember Affairs, provides assistance with consumer financial challenges through education, monitoring of complaints, and coordinating with federal and state agencies on military protection measures.
"In 4 ½ years, we’ve secured over $11 billion in relief for 25 million consumers and over $100 million came out of enforcement actions focused on protecting service members, veterans and their families," said Holly Petraeus, assistant director of the Office of Servicemember Affairs, which is part of the Consumer Financial Protection Bureau.
Part of OSA’s mandate is to monitor military complaints, look for trends, and coordinate with federal and state agencies, Petraeus said.
According to the Corporation of Enterprise Development, more than one in 10 households with incomes below $30,000 annually have used alternative financial service credit products, such as payday and auto-title loans. With annual interest rates at 400 percent or higher for payday loans, few can afford to pay the money back on time, they to take out additional loans and get trapped in an unrelenting cycle of debt.
"In the early 2000s, there was an alarming increase in the number of businesses offering the new phenomenon of ‘payday loans’ and a corresponding increase in the number of service members taking advantage of that easy money, often without the ability to repay what they borrowed," Petraeus said.
Congress passed the Military Lending Act in 2006 to protect service members on active duty and their families by capping rates at 36 percent. Many lenders took advantage of the loopholes and continued to target the military with high-interest loans.
Petraeus said she encourages Reservists to visit the CFPB website at www.consumerfinance.gov where they will find a variety of assistance, including financial tools to help in buying a home or paying for college, information on filing a complaint, and retirement calculators.
"We have over 1,000 questions in ‘Ask CFPB’ where we put the most common consumer questions that we receive," Petraeus said. "There are a number of them in there that have military-specific information in the answers."