SCRA Paper Exposes Underused Benefits

A couple of months ago, the Consumer Financial Protection Bureau (CFPB) issued a research paper revealing that plenty of Active Duty servicemembers entitled to reduced interest rates under the SCRA were not receiving the benefit from their creditors. The report also unveiled that creditors were still repossessing servicemembers’ cars without a court order. This is despite considerable attention given to the issue for the past few years.

Violation of the SCRA can mean significant penalties for businesses. Even if the Defense Manpower Data Center (DMDC) information is inaccurate, the creditor should still provide the benefits if the servicemember provides written notice and orders. Thus, creditors should ensure that military members receive the help they’re entitled to under the Servicemembers Civil Relief Act (SCRA).

Background On SCRA

The SCRA is a federal law that provides legal and financial protections for Active Duty military members. This legislation protects military members if their legal or financial obligations adversely affect their rights during military service.

This legislation offers various benefits for those that serve the nation. However, the CFPB’s research paper zeroed in on two advantages: interest rate reduction and repossession protection.

According to the SCRA, active duty members have the right to reduce their interest rates to a maximum of 6 percent annually. This applies to home, automobile, student loans, and incurred credit card debt before active duty.

In addition, the SCRA bans creditors from repossessing the personal property of service members, like automobiles, without a court order. Hence, your creditor or landlord should file a lawsuit and get an order from a judge before taking action. This is provided that the property was purchased or leased before being called to action and deposit or installment payments have been made.

The SCRA grants these protections so military personnel can focus on their job. Thus, military personnel should understand their rights to spare themselves and their families from unnecessary worries.

Sometimes, the DMDC has shortcomings when verifying a military personnel’s status. If that individual presents the proper documentation to make them eligible for SCRA benefits, the creditors should provide the right benefits.

Critique Of The CFPB’s Study

While the CFPB study intends to safeguard the rights of military personnel, this research paper is far from perfect. The CFPB revealed that their data have limitations. They have potentially incomplete information on data of consumers from creditors, and there might be speculative interest rate information.

These shortcomings are common among studies wherein the inputs aren’t readily available. Some may argue that these shortcomings infer that the headline is misleading. This is disappointing for the agency, knowing among its primary responsibilities is to protect consumers against deceptive, unfair, and abusive practices.

Moreover, there is some hyperbole in the headline of the press release. The headline is “CFPB Finds Members of the Reserves and National Guard Paying Millions of Dollars in Extra Interest Each Year.” It can be challenging to understand its purpose. It doesn’t specify its goal of helping creditors ensure service members practice their rights.

Actions Creditors Can Take To Ensure SCRA Compliance

What can creditors do to ensure that they comply with the SCRA? The CFPB highlighted some actions creditors could take to alleviate the burdens of servicemembers:

  1. Reduce interest rates for all accounts the creditor holds if the servicemember invokes protections for a single account. This should be easy if the servicemembers have multiple accounts. This also prevents military personnel from having to notify the same creditor about their SCRA benefits.
  2. Search for methods to apply the SCRA interest rate reduction automatically. The creditor should identify military personnel who didn’t request protection. If they have sufficient resources, this suggestion seems feasible. This improvement can help servicemembers obtain benefits without having to notify the creditor and provide orders.
  3. Develop periodic indicators of SCRA benefit utilization. The report stipulates that comprehensively reviewing the SCRA interest rate reduction utilization would help expand other service members’ financial protections. While this statement makes sense, it is unclear how this would apply to a single creditor.


While adhering to the stipulations of the SCRA may mean extra work for creditors, the effort will have been worth it. SCRA violations can mean severe consequences for businesses, and it is crucial to follow the law accordingly. Serving in the military means potentially sacrificing one’s life and time. Service members are granted certain privileges given their sacrifices, and creditors must honor these rights accordingly.

If the DMDC information is wrong, but the servicemember provides written notice and orders, the creditor has to provide the benefits. Thus, creditors must proactively ensure that servicemembers receive the benefits they are entitled to under the SCRA.


What is the Servicemembers Civil Relief Act (SCRA)?

The Servicemembers Civil Relief Act (SCRA) grants active-duty military personnel particular legal and financial protections. These protections allow them to focus on the work that may have affected their ability to meet those obligations.

Is the CFPB’s study important?

While the CFPB’s study is far from perfect, it exposes how plenty of service members don’t get to maximize the benefits they’re entitled to. This study shows it is vital to protect active-duty service members’ rights.

What are some affirmative measures that creditors can take to ensure compliance with the SCRA?

The CFPB made three suggestions. The first is to reduce interest rates for all accounts the creditor holds if the servicemember invokes protections for a single account. The second one is to search for methods to apply the SCRA interest rate reduction automatically. The last is to develop periodic indicators of SCRA benefit utilization.

What should servicemembers do if they believe they are not receiving the SCRA benefits they are entitled to?

If service members believe they’re not receiving their benefits, they should seek legal counsel and action to fix this. It would be ideal to seek the assistance of a military attorney as they understand the SCRA well.

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.