Lender Retaliation After SCRA Rights Are Invoked is Prohibited

SCRA RightsServicemembers are entitled to certain SCRA rights. Lenders who violate them — intentionally or otherwise — may find themselves in trouble with the law.

When a servicemember asks a creditor for to extend privileges under the Servicemembers Civil Relief Act (“SCRA”), the lender must be cautious and  tread carefully before denying such a request or taking any retaliatory action. Lenders cannot retaliate against servicemembers or refuse to grant additional credit to servicemembers, only because they invoke their SCRA rights. Although other relevant factors may come into play, courts may determine these on a case-by-case basis and a decision might come down against the lender.

SCRA Rights

If the servicemember truly does not qualify for further credit, the lender may deny it. SCRA rights do not grant automatic loan approval to servicemembers. However, denying credit must be based on circumstances other than on the fact that they tried to invoke their SCRA rights.

Lenders also cannot unilaterally change the existing credit agreement with the servicemember. They also cannot make a negative report to a credit bureau based upon learning that a person is in the military. If the servicemember is delinquent, that  creditor may notify a credit bureau. But simply invoking SCRA rights is not reportable.

Recent news articles have demonstrated that both state enforcement authorities and the Department of Justice have been vigilant in reviewing the treatment of servicemembers. The SCRA provides for severe penalties for non-compliance. Claiming ignorance of the servicemember’s status will likely not help the creditor’s situation.

Some protections extend past military service termination. Review each borrower’s military status carefully to be sure to uphold their SCRA rights.


The one-stop military status verification process offered by the SCRACVS is available to all creditors, and scrubbing (running multiple inquiries with different effective dates) is also recommended. Trust the SCRACVS for all your military status verification needs.

Attorney Roy Kaufmann serves as the Director of the Servicemembers Civil Relief Act Centralized Verification Service, located in Washington, D.C. As a recognized authority on the Servicemembers Civil Relief Act, Mr. Kaufmann has published hundreds of articles and hosted many webinars. His teachings help law firms and businesses to remain compliant with the SCRA rules and regulations so as to avoid costly fines.