With Military Appreciation Month celebrated in May, what better time for financial institutions to refresh their best practices in protecting and serving military credit consumers.
Over the course of the next several weeks, there will certainly be a number of appropriate ceremonies and events to recognize the tremendous service of military members and their respective families, but these individuals should be respected and honored year-round with the sacrifices they make for our country.
To help, the Department of Defense (DOD), Congress and the Consumer Financial Protection Bureau (CFPB) have worked to introduce regulations aimed at protecting the military credit consumer in the financial services universe.
The Servicemembers Civil Relief Act (SCRA) was signed into law in 2003, replacing the original Soldiers and Sailors Civil Relief Act, and provides caps on interest rates, stays of certain legal proceedings, protection from eviction and termination of leases without repercussions. It has evolved through the years with enhancements, and largely protects active-duty service members, including National Guard and reserve members who have been activated by the federal government.
The Military Lending Act (MLA), on the other hand, has received the most headlines over the past year. In July 2015, the DOD issued a Final Rule, expanding the scope and requiring compliance by October 2016, with rules for credit cards extended until October 2017. It limits the APR to 36 percent on covered products, requires military-specific disclosures and prohibits creditors from requiring a service member to submit to arbitration in the event of a dispute. With the updates recently introduced, these protections are now extended to active duty spouses and dependents. Creditors must also verify active duty status and dependents at origination.
Beyond these very specific laws to follow, and the solutions to make that process simplified, lenders can do so much more serve this audience.
- Provide education on your website about military-specific benefits and rebates. Don’t bury them – call them out so this audience can clearly identify opportunities to partner with you, whether that come in the form of waived bank fees, special credit cards or discounted offers on vehicles.
- If you serve a large military population, create materials and web content to communicate how to handle deployment situations. The SCRA specifically enables these individuals to institute an interest-rate cap on pre-service debt, plus the ability to terminate leases. Deployment is a stressful time, so make it easier with clear actions your consumers can take.
- Encourage active duty military members to add an Active Duty Alert to their credit report to help protect themselves from fraud and identity theft.
- Leverage tools to scrub your portfolio lists to reveal military indicators.
Less than 1 percent of our nation’s population serves in uniform, but there is definitely a lens being shined on how companies serve and connect with military members and their families.
Now is the perfect time to assess your practices and compliance track record with military credit consumers to see how you rank on the mandatory regulations, as well as your general customer service and communications.
Because really, our military deserves support and recognition not just in May, but always.