At first glance, the home mortgage advertisements, sent to some 10,000 customers in May 2016, looked as if they came from the Department of Veterans Affairs: a blue seal with the words “Veterans Administration” above a prominent “VA,” references to “Form VA-1000,” a phone number to call labeled “Dept. Phone.”
But the mailers weren’t from VA at all. They were from a private company, RMK Financial—also known as Majestic Home Loan—that had no affiliation with the federal government. In fact, just the year before, the federal government had fined the company for, among other things, falsely implying they were associated with VA, as well as with the Federal Housing Administration. An order accompanying the fine instructed the company to stop making false representations.
So earlier this year, the Consumer Financial Protection Bureau—the government entity charged with protecting consumers from deceptive or predatory financial practices—fined the company a million dollars and banned RMK Financial from the mortgage industry.
“Even after the 2015 law enforcement order, RMK continued to lie to military families by falsely implying government endorsement of its home loans,” said Rohit Chopra, the director of the bureau, in a press release at the time. “Our action reflects our commitment to weed out repeat offenders, and we are shutting down this outfit for good.”
When the Consumer Financial Protection Bureau was founded in 2011, the law that brought it into existence—the Dodd-Frank Act, designed to rein in some of the practices that led to the 2008 financial crisis—stipulated that the bureau have an office dedicated to the military community. Because of things like frequent moves and deployments, with their accompanying expenses, as well as access to certain benefits and financial aid, military members, their families, and veterans have long been targeted by bad financial actors.
In its 12 years of existence, the bureau has reviewed more than 323,000 complaints by members of the military community. Last year alone, it recovered $175 million in monetary relief from enforcement actions against companies that harmed military members and veterans.
But the future of the Consumer Financial Protection Bureau is uncertain. Last year, the Supreme Court heard arguments in a case that alleged the funding mechanism for the bureau—specifically structured to keep it independent of political interference—is unconstitutional. If the court finds that to be true, the bureau’s funding could be gutted and its operations curtailed.
“What we stand to lose is the primary enforcement mechanism for the Servicemembers’ Civil Relief Act and the Military Lending Act, which is huge,” says Kelly Hruska, the director of government relations for the National Military Family Association, which signed onto a friend-of-the-court brief asking the court to protect the bureau. “The CFPB is there now—and we’re hoping in the future—to help enforce legislation that we’ve worked really hard to make sure is there to protect service members.”
‘You May Be Looking at Other Consequences—Possibly Separation’
In the military, financial readiness is operational readiness. Deployed service members can better focus on their mission when they’re not worrying about whether the family they’ve left behind is financially secure. And bad credit can affect things like security clearances, which can in turn impact a service member’s career.
“Security clearances for service members are everything,” Hruska says. “If you endanger that, then you may be looking at other consequences—possibly separation.”
On top of these consequences, scammers and predatory financial institutions frequently target members of the military community, because military families have steady income, frequent life changes or disruptions, and certain monetary benefits that civilians do not. Nearly 80% of adults who are or who have been in the military have been targeted by scams related to their service or benefits, according to research conducted by AARP. Members of the military community are more likely to lose money—and lose more money—to bad actors than civilians are.
The Dodd-Frank Act called for a military-focused office within the Consumer Financial Protection Bureau for exactly this reason. The Office of Servicemember Affairs’ mission is to “educate and empower service members, veterans, and military families on consumer financial products and services,” says its assistant director, Jim Rice. The office also monitors complaints from the military community and coordinates with state and federal partners, as well as legal service advisers from each of the military branches, to try to create a comprehensive web of financial support for the military community.
“It is much more difficult to get that financial education to every individual,” Rice says. “If you get a system in place that is supporting that servicemember, veteran, or military family, we are much better off.”
The bureau is charged with enforcing two critical pieces of legislation specifically related to the military community: the Servicemembers’ Civil Relief Act and the Military Lending Act. The Servicemembers’ Civil Relief Act is a WWII-era law, amended most recently in 2003, meant to protect military families with “an eye friendly to those who dropped their affairs to answer their country’s call,” as the Supreme Court has written.
“The one thing that everybody knows [is] the military clause in a lease,” Hruska says. “If you get military orders, you can break your lease. You have to have that military clause in there. That’s the Servicemembers’ Civil Relief Act.”
The law also makes it harder to evict military families or foreclose on their homes, reduces the interest rates of loans service members took out prior to joining the military, and stays certain court proceedings, among other protections.
The Military Lending Act caps the annual percentage rate on many loans extended to military members at 36%. In 2015, the Defense Department worked with the Consumer Financial Protection Bureau to extend that cap to a wide range of consumer credit products, such as credit cards and payday loans.
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The Office of Servicemember Affairs also monitors complaints from members of the military community and works with the enforcement arm of the bureau to provide relief when possible.
“There are significant increases [of complaints] over the last couple of years, particularly [by] service members,” Rice says.
“But I like to say that that’s not necessarily a bad news story because it means that people are aware that there is a bureau, and they’re aware that we have a complaint process, and that people are fairly satisfied that when they submitted a complaint, that the financial service entity is going to get back with them.”
‘I Have to Remind People: Report It’
But the Consumer Financial Protection Bureau’s ability to continue to serve the military community, along with other consumers, is at risk. In 2018, the Community Financial Services Association of America, a payday-lending industry trade group, sued the bureau, challenging a rule that prohibits payday lenders from making repeated attempts to take loan repayments directly out of a person’s bank account. Many of the groups associated with the Community Financial Services Association of America have been the subject of enforcement actions by the bureau.
The Fifth Circuit Court of Appeals upheld the legality of the prohibition itself. But it ruled that the funding mechanism for the bureau, which is paid for directly from the Federal Reserve, was unconstitutional—and thus the prohibition must be voided. The case is now with the Supreme Court, which heard oral arguments in October. It is expected to release its decision this spring. If the Supreme Court sides with the Fifth Circuit Court of Appeals, the bureau will be funded through the congressional appropriations process instead, subjecting it to the whims of lawmakers. Consumer advocates worry that Republicans, who have long been critical of the bureau’s mission, would slash its funding, and such a determination from the court could call into question the bureau’s earlier rulings.
When the case was appealed to the Supreme Court, Hruska’s organization, the National Military Family Association—along with 14 other military services organizations—signed onto an amicus brief asking the court to protect the bureau and arguing that putting its funding at risk harms military members and their families.
“The CFPB … plays a critical and unique role in promoting the financial wellbeing of America’s 16.5 million veterans, over 2 million servicemembers, and their families,” they wrote in the brief. “At a pragmatic level, the national scope of the CFPB’s work is critical, since servicemembers live and are deployed across the country and overseas. At an individual level, amici [the signatories] and their members have seen firsthand how the CFPB combats products and services that target, exploit, and harm the military community.”
“Amici do not typically weigh in on Supreme Court cases, but the practical impact of the Fifth Circuit’s ruling is simply too consequential to ignore,” they wrote.
The brief outlines some of the bureau’s major actions to protect service members in just the last few years—the type of action that might become all but impossible if the bureau’s funding is not secure.
In 2023, in addition to banning RMK Financial from the mortgage industry, the bureau took aim at TitleMax, the title lending company, for violating the Military Lending Act, which has an annual interest rate cap of 36%.
“TitleMax was extending prohibited title loans to military families and often charging nearly three times that 36% rate,” Rice says.
The bureau fined the company $5 million, in addition to $10 million in civil penalties. In the two years before that, the bureau also sued MoneyLion Technologies, FirstCash Incorporated, and Cash America West for violating the Military Lending Act.
“It’s an ongoing effort to stay ahead of some of these organizations that prey on the military community,” Rice says.
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It’s the sort of whack-a-mole work Hruska and other advocates say is critical to continue.
“I have to remind people, ‘If you’re having problems—if you think that your rights under the [Servicemembers’ Civil Relief Act] or the [Military Lending Act] are being violated—report it,’” Hruska says. “‘Report it to CFPB. It is so easy to do. Go to their website. Right there on the front page. Report it.’”
“Unfortunately,” she says, “I think especially with a lot of … these financial protections, you’re not aware until it affects you.”
This War Horse feature was reported by Sonner Kehrt, edited by Kelly Kennedy, fact-checked by Jess Rohan, and copy-edited by Mitchell Hansen-Dewar. Abbie Bennett wrote the headlines.