The Servicemembers Civil Relief Act (SCRA) was created to protect active-duty military members from civil actions and financial obligations. This includes default judgments. To file an eviction suit, the resident’s social security number and date of birth are required. If this information is not available, the SCRA affidavit is needed.
In November 2021, a 38-page class action suit was filed in the Eastern District of North Carolina against USAA (United Services Automobile Association). It alleged violations of the Military Lending Act and Truth in Lending Act by failing to cap interest rates at 6% during active duty service and permanently forgiving interest above 6%.
Since May 4, 2009, USAA has been accused of failing to protect its members’ rights and overcharging more than 210,000 members with credit cards and other loans at USAA Savings Bank and USAA Federal Savings Bank.
Active Duty Member Interest Rate Change
In this lawsuit, an active-duty servicemember claimed her interest rate increased from 6% to 11% after she left active duty. USAA was required to issue refunds for the overcharged amount, but she insists that she never received records detailing the calculation errors.
In 2021, service members reported discovering errors when USAA sent “misleading” correspondence and courtesy checks that understated the refunds they were owed. This suit is not the first time USAA has faced fines for violations of the SCRA. In 2020, USAA was fined $85 million for numerous SCRA violations in the prior year. The discovery of discriminatory auto lending practices prompted a call for USAA to enhance its Community Reinvestment Act exam in 2022.
Payment
USAA opposed the class action suit but agreed to pay $64.2 million to avoid a lengthy legal process. They stated that about half of the settlement amount would be used to reissue uncashed refund checks. USAA further stated that it offers interest rates even lower than those required by the SCRA and Military Lending Act.
For more information on the SCRA, click here.
Sources:
Toups Dismissal for Hospital – Race Discrimination, Hostile Work…. https://www.cshlaw.com/results/toups-dismissal-for-hospital-race-discrimination-hostile-work-environment/
Veteran Debt Relief (Help for Veterans with Bad Credit) | DebtWave. https://debtwave.org/credit-card-debt-help-veterans-active-duty-military-members/
