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More military consumers cite aggressive debt collection

Mar. 7, 2014 - 10:56AM   |  
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Debt collection is emerging as a big issue for service members and veterans, according to data released by the Consumer Financial Protection Bureau on March 6.

Since the agency began accepting complaints in some categories last July, roughly 3,800 complaints specifically about debt collection have been received from military consumers — service members, veterans and their families. A breakout of how many complaints came from active-duty members and their families was not available.

Over the same period, the bureau has received 14,100 complaints from consumers in the military community, and has helped them recover more than $1 million.

The complaint volume rose by 148 percent from 2012 to 2013, according to the bureau.

Debt collection has quickly become the highest-volume complaint category for military consumers. Those complaints are about to overtake mortgage complaints as the largest category in terms of cumulative volume.

Since the bureau began accepting complaints about mortgages in December 2011, about 4,700 such complaints have been received from the military community. The 3,800 debt collection complaints have been racked up in just seven months.

“The sheer volume of debt collection complaints alone makes this an important complaint category [for the CFPB’s Office of Servicemember Affairs],” wrote Holly Petraeus, assistant director for that office, in an introduction to the CFPB report. “Beyond the number, however, I have heard in my many visits to military installations across the country about aggressive and deceptive tactics by debt collectors specifically targeting members of the military.”

Tactics to coerce payment often involve contacting the service member’s chain of command, threatening punishment under the Uniform Code of Military Justice, threatening to have a service member reduced in rank or threatening to have the service member’s security clearance revoked, she wrote.

Many of the complaints are not related to monetary relief; the office also has helped military consumers with such problems as correcting credit report errors or opening or closing a bank account.

In addition to the 3,800 debt collection complaints and 4,700 mortgage complaints from July 21, 2011, through Feb. 1, 2014, CFPB also has received from military consumers:

■1,700 credit card complaints.

■1,500 bank account and services complaints.

■1,200 credit reporting complaints.

■600 consumer loan complaints.

■400 private student loan complaints.

■100 payday loan complaints.

■50 money transfer complaints.

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