SENATORS CALL ON CFPB, DOD TO INVESTIGATE ‘AGGRESSIVE DEBT COLLECTION ACTIONS’ AGAINST ACTIVE MILITARY MEMBERS

Report alleges that some retailers are bringing suit against servicemembers without opportunity to defend themselves

August 05, 2014

(Washington, DC) – U.S. Senators Jeanne Shaheen (D-NH), Jack Reed (D-RI), Richard Blumenthal (D-CT), Mark Warner (D-VA)  and Tim Kaine (D-VA) today are calling on the Consumer Financial Protection Bureau (CFPB) and the Department of Defense (DoD) to investigate the findings of a recent report indicating certain retailers have filed debt collection suits against active duty servicemembers without the opportunity to defend themselves. In a letter to CFPB Director Richard Cordray and DoD Secretary Charles Hagel, the Senators expressed concern about the “aggressive debt collection actions against active duty servicemembers without affording them, arguably, a real opportunity to defend themselves” and urged the agencies to fully investigate the claims.

“Since many active duty servicemembers are often transferred out-of-state – or even out-of-country – it is more difficult for them to defend themselves,” the Senators wrote. “As a result, the retailers are alleged to have used these cases to force involuntary garnishment of servicemembers’ wages while they are serving our country.”

In the letter, the Senators cited the Servicemember Civil Relief Act (SCRA) that was implemented to protect the legal interests of servicemembers who often face unique financial circumstances as a result of their deployment or service to our nation. Specifically, the Senators said, “the SCRA allows servicemembers to devote their full attention to protecting our country and seeks to prevent unscrupulous actors from taking advantage of financial challenges that may result from a deployment.”  The recent report, however, indicates “that certain retailers may have violated the spirit of this law.”

“We urge you to fully investigate these claims and educate our servicemembers about their rights and the debt collection practices used by these retailers,” the Senators concluded. “In addition, we encourage you to determine whether there are any actions we can take to ensure due process for our servicemembers, especially the practice of including contractual provisions that may limit servicemembers’ ability to defend themselves while they are on active duty.”

The full text of the letter is available here and below:

August 5, 2014

The Honorable Richard Cordray

Director

Consumer Financial Protection Bureau

1700 G Street, NW

Washington, D.C. 20552

The Honorable Charles T. Hagel

Department of Defense

1000 Defense Pentagon

Washington, DC 20301-1000

 

Dear Director Cordray and Secretary Hagel,

We write to call your attention to a recent report that certain retailers have undertaken aggressive debt collection actions against active duty servicemembers without affording them, arguably, a real opportunity to defend themselves.  We urge you to investigate these claims, educate our servicemembers about these practices and look into potential actions we can take to ensure that active duty servicemembers are able to defend themselves.

The Servicemember Civil Relief Act (SCRA) protects the legal interests of our servicemembers who often face unique financial circumstances as a result of their deployment or service to our nation.  SCRA allows servicemembers to devote their full attention to protecting our country and seeks to prevent unscrupulous actors from taking advantage of financial challenges that may result from a deployment.

A recent report from ProPublica and the Washington Post alleges that certain retailers may have violated the spirit of this law.  According to the report, these retailers seemingly included a provision in the fine print of their contracts that allows the retailers to bring suit against servicemembers in certain jurisdictions in the Commonwealth of Virginia, even though they may not be based there or, in fact, ever have been based there.  Since many active duty servicemembers are often transferred out-of-state – or even out-of-country – it is more difficult for them to defend themselves.  As a result, the retailers are alleged to have used these cases to force involuntary garnishment of servicemembers’ wages while they are serving our country.  The report also calls into question the adequacy of the defense provided by the courts in these instances.

We urge you to fully investigate these claims and educate our servicemembers about their rights and the debt collection practices used by these retailers.  In addition, we encourage you to determine whether there are any actions we can take to ensure due process for our servicemembers, especially the practice of including contractual provisions that may limit servicemembers’ ability to defend themselves while they are on active duty.

Thank you for your attention to this matter.

Jeanne Shaheen                                                                              Jack Reed

United States Senator                                                                   United States Senator

 

Richard Blumenthal                                                                         Mark R. Warner                                               

United States Senator                                                                   United States Senator

 

Tim Kaine

United States Senator