The millions of men and women now serving in our military, and the veterans who have done so, performed a vital service in defending our nation. Yet increasingly, members of the military are under attack from those who would put them in financial jeopardy on the home front.
Fortunately, the Consumer Financial Protection Bureau's Office of Servicemember Affairs is now acting as an advocate for military personnel, collecting complaints and helping to get responses from financial institutions that address issues.
6 Financial Challenges Hitting Military Servicemembers Hard
A recent report from the CFPB revealed many of the challenges that military service-members have to face. Although the number of complaints has risen steadily since the complaint-process first became available in mid-2011, the CFPB has managed to resolve many of the issues favorably, with about 10 percent of resolutions resulting in monetary compensation.
Let's look at the six areas in which service-members and veterans most frequently filed complaints during the most recent three-month period for which results are available.
Fully half of the complaints the CFPB's military office received had to do with mortgage loans. Among those complaints, 58 percent had to do with difficulties with getting loan modifications or dealing with banks' attempts at foreclosure or mortgage-debt collection. Another 24 percent addressed difficulties that military members had with loan servicing companies, including problems with payment-crediting and accurate handling of escrow accounts.
In second place, 16 percent of complaints from service-members focused on bank accounts and related services. The most common problem had to do with account opening, closing, and ongoing management issues, making up 44 percent of all bank-related complaints. Trouble handling deposits and withdrawals was responsible for 32 percent of the complaints the CFPB received, while another 13 percent were related to overdrafts, minimum balance fees, and other problems stemming from low account balances.
Fifteen percent of military-member complaints were linked to the credit card industry, with a wide array of different problems receiving criticism from service members. Among the most commonly cited were billing disputes, which made up 15 percent of all credit card complaints. Mistakes or disputes about the appropriate interest rate or finance charges cover 9 percent of the complaints, while 8 percent were related to problems that card companies had in reporting accurate credit card information.
Many military members have had trouble with their credit reports, with 11 percent of all CFPB complaints related to credit reporting. The majority -- 63 percent -- of complaints centered on inaccurate information on service-members' credit reports. Another 21 percent criticized the investigations of credit-reporting agencies in trying to provide accurate information, while 7 percent they couldn't even get their credit report or credit score.
Student loan problems represented 7 percent of all complaints that the CFPB received from military personnel. Although government programs make it somewhat easier for service-members to get financing for education, outstanding loan debt has nevertheless become an increasing problem, especially when private loans don't include as favorable provisions as other types of loans. Yet the CFPB has put up a good track record of resolving cases, with the highest median monetary relief awarded of any category at $1,866.
Other types of loans, such as car loans and other consumer debt, represented 6 percent of complaints. Although the report didn't break down complaints by category, what often proves problematic with car loans is the fact that a vehicle's trade-in value may be insufficient to cover the outstanding loan amount, requiring service-members to put cash down upfront when they want to buy new vehicles.
Whether or not you've served in our Armed Forces, you can file a financially related complaint with the CFPB. To get more information, visit the CFPB website here. It's the best way you can get help to defend yourself from bad practices at financial institutions.