The Office of Servicemembers Affairs (OSA) within the Bureau of Consumer Financial Protection (CFPB) monitors and analyzes consumer complaints from servicemembers, veterans, and military families (collectively referred to as servicemembers). The OSA annual report, issued in January 2019, provides data and analysis around the most common complaints submitted by servicemembers.
A majority of complaints from servicemembers revolve around credit or consumer reporting followed by debt collection issues. These issues can put servicemembers’ security clearance, duty status, potential promotion, or entire military career in jeopardy. Recent changes to the Department of Defense security clearance rules make these issues even more important to resolve as quickly as possible. For example, an average of 4,700 to 8,000 servicemembers are separated each year from the military due to financial issues, losing their security clearance due to unpaid debts. These separations take a toll not only on the servicemembers and their families, but cost the government hundreds of millions of dollars (up to $456 million per year) to recruit and replace those servicemembers.
Background checks by the Department of Defense, or DoD, used to be performed periodically (typically, every 5 years). Recent changes have implemented a “continuous monitoring” policy that automatically checks servicemembers’ credit histories. Additionally, deployed servicemembers have been dealing with an increase of identity theft or other fraud while on active duty, as well as issues in receiving bills or collection attempts in a timely manner due to frequent address changes. Main areas of concern are medical debt, VA Debt related to veterans’ health benefits and GI Bill benefits, telecommunications debt, credit cards impacted by changes to the Military Lending Act, student loan servicing, and add-on products in the car-buying process, particularly GAP insurance.
As the OSA continues to monitor these problem areas, they are also educating and empowering servicemembers to make better informed decisions. Misadventures in Money Management (MiMM) is a graphic, “choose your own adventure” training novel to engage servicemembers with real life financial choices in a fun and interactive manner. Topics include consumer financial decision-making, choosing a financial institution, understanding protections under the Servicemembers Civil Relief Act (SCRA), avoiding impulse purchases, and understanding how debt can affect a military career. Since its launch, over 22,000 new recruits and ROTC senior cadets have used this training, which is leading to an increased knowledge on the covered topics, and which may also lead to an increase in SCRA requests for relief and changes in purchasing decisions as the training is offered to more servicemembers.
The OSA works with the DoD, the VA, the Department of Education, the FTC, as well as state agencies to coordinate efforts regarding consumer protection measures related to financial products and services offered to servicemembers and their families. A key component to this is monitoring consumer complaints, which will continue to be one of their top priorities. The OSA understands that the military lifecycle can be physically and emotionally strenuous to servicemembers, veterans, and their families, and they understand that adding financial stresses to that service can become a burden too heavy to bear. They remain committed to their mission: to promote financial awareness and wise decision making to help keep our bravest from financial disarray.