When individuals enlist in the armed forces, they immerse themselves in a distinctive culture with its own customs, traditions, and daily routines, setting it apart from civilian life. Military service requires new recruits to quickly grasp a multitude of acronyms and specialized terminology unique to the military. Everyday objects take on new names: walls become bulkheads, left becomes port, right becomes starboard, cafeterias become mess halls or DFACs, retail stores become PXs, and jobs become MOSs.
While many of these military-specific acronyms become second nature to servicemembers over time, there are several that warrant attention whenever service members engage in financial transactions such as shopping, buying, borrowing, renting, or conducting any financial activity. These special acronyms represent the names of crucial consumer protection laws designed to safeguard servicemembers and military families from financial fraud and unfair business practices.
July is designated as Military Consumer Protection Month, and this week marks National Consumer Protection Week. To commemorate these occasions, we’re assisting service members in understanding the “ABCs” of military consumer protection.
SCRA: Service members Civil Relief Act
What it is: The Servicemembers Civil Relief Act (SCRA) is a federal law offering additional legal and financial protections to active duty servicemembers in specific situations. The law also extends to National Guard members and reservists on active duty for over 30 consecutive days, with some protections applicable to dependents as well.
What it does: The SCRA enables servicemembers to cap the interest rate on certain financial obligations and safeguards against certain adverse actions.
Examples of protections:
Service members can limit the interest rate on pre-service loans to 6 percent.
Service members can terminate contracts such as vehicle leases, cell phone contracts, and residential leases under certain conditions without facing early termination charges or penalties.
Provides protections against default judgments and actions like repossession, foreclosure, and eviction without a court order.
It is unlawful to deny servicemembers their SCRA rights or retaliate against them for asserting these rights.
MLA: Military Lending Act
What it is: The Military Lending Act (MLA) is a federal law imposing restrictions on the cost and terms of specific types of credit. It provides active duty servicemembers (including those on active Guard or active Reserve duty), spouses, and certain dependents with legal protections concerning various consumer credit and loan types.
What it does: The MLA limits interest rates on certain loans and prohibits lenders from compelling servicemembers and dependents of active duty servicemembers to waive certain consumer rights.
Examples of protections:
Caps interest rates and most fees for many types of loans at 36 percent.
Prohibits lenders from mandating military allotments for loan approval.
Prevents creditors from imposing mandatory arbitration or requiring servicemembers to waive their legal rights, including those under the SCRA.
Lenders cannot prohibit prepayment or impose pre-payment penalties on servicemembers.
A creditor is forbidden from charging servicemembers more than a 36 percent Military Annual Percentage Rate or violating the MLA for many types of loans.
Additionally, servicemembers have the same rights as civilians under the following consumer protection laws:
FDCPA: Fair Debt Collection Practices Act
What it is: The Fair Debt Collection Practices Act (FDCPA) is the primary federal law governing debt collectors’ practices when collecting certain types of debt.
What it does: The FDCPA prohibits debt collectors from engaging in abusive, deceptive, or unfair debt collection practices.
Examples of protections:
Debt collectors are generally prohibited from contacting individuals at unusual or inconvenient times or places, such as before 8 a.m. or after 9 p.m.
Debt collectors cannot disclose a debt to others, including commanding officers or supervisors.
Debt collectors must provide certain information about the debt upon written request.
FCRA: Fair Credit Reporting Act
What it is: The Fair Credit Reporting Act (FCRA) is a federal law requiring credit reporting agencies to ensure fair, accurate, and confidential management of credit history data.
What it does: The FCRA safeguards individuals’ right to access their credit report and ensures accuracy and privacy of credit history information.
Examples of protections:
Grants consumers the right to receive a free copy of their credit report annually from each of the three major credit reporting agencies.
Mandates credit reporting agencies to investigate, verify, or remove disputed credit report information promptly, usually within 30 days.
Requires consumers to receive notice of negative information added to their credit file.
Service members have the right under the FCRA to place free “Active Duty Alerts” on their credit profile to mitigate identity theft risks during deployment.
Local and state laws:
In addition to federal laws, many states and local jurisdictions have laws protecting consumers, including servicemembers and military families. State Attorneys General and local consumer protection officers can provide information on local laws protecting military members.
The Military Consumer website offers an extensive list of local and state laws and resources to aid in protecting servicemembers, veterans, and military families.
Regardless of the “language” they currently speak, servicemembers have earned the right to assert any and all rights protecting them as consumers. They should be well-versed in the terminology of military consumer protection to thwart scammers and fraudsters. Members of the military community should strive to become proficient in the language of military consumer protection.
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