Capital One Pays $12 Million to Servicemembers to Settle SCRA Violations

Capital One SCRA Settlement

The settlement from Capital One is a reminder to servicemembers to ensure all SCRA protections are enforced.

Back at the end of July, the news broke that Capital One would be paying $12 million to service members and their families to settle serious claims of wrongful foreclosures that violated the Servicemembers Civil Relief Act.

The settlement is a reminder to the military community to stay active in checking that protections like the SCRA are enforced at every level.

What Happened?

Capital One was accused of refusing to reduce service member interest rates to the limits dictated by the SCRA and foreclosing on mortgages without court orders. Although the company never admitted to any wrong doing and cooperated with the investigation, service members lost their homes and paid unlawfully high interest rates between 2006 and 2011.

In response, the Department of Justice and Consumer Financial Protection Bureau came to an agreement with Capital One to pay the affected customers $12 million in total. This is one of the most comprehensive restitution settlements in military and financial history according to Thomas Perez, an assistant Attorney General at the Justice Department.

What Can You Do?

Although it’s great that Capital One cooperated to compensate the victims of this oversight, not all SCRA oversights and disregards are noticed, taken to the proper authorities and then handled to compensate the consumer. One of the major contributors to this problem is the lack of general knowledge about the protections the SCRA gives service members and their families as well as to whom you can report problems to.

Major SCRA Protections

To make sure you’re informed on the protections granted by the act, you can read a summary online or ask a member of the legal department on your base if you have a question about how these protections may apply to a personal situation. Among other things, the SCRA:

  1. Caps the interest rate on debt incurred before service at 6 percent.
  2. Prevents landlords from evicting servicemembers on active duty for nonpayment of rent below a certain threshold.
  3. Legal termination of pre-service lease contracts following a certain procedure.
  4. Prevents creditors and insurers from pursuing adverse actions solely because a servicemember exercises SCRA rights.

Remember that the protections of the SCRA are for active duty service members only and do not protect debt incurred or leases started after a deployment is issued. That said, if you suspect that you or your service member aren’t receiving the full benefit of the SCRA, contact the legal department on base or a service member watchdog agency like the Office of Servicemember Affairs.

 

Photo courtesy of Eric Hauser