Some Banks May be Violating SCRA Interest Rate Cap for Servicemembers

The Servicemembers Civiil Relief Act is intended to reduce interest rates for members of the military. But some banks may be violating the SCRA interest rate cap, charging servicemembers more than allowed.

What is the SCRA?

The Servicemembers Civil Relief Act, or SCRA, is intended to give servicemembers financial help by reducing their interest rates and otherwise preventing financial trouble. Congress passed new amendments to the SCRA in 2003, though the law’s bare bones have really been around since the first world war.

The SCRA guarantees that members called to active duty will have the interest rates on any debt they may have reduced to 6%. This will last from the date they receive their orders through the remainder of their active duty, according to the SCRA. After returning from active duty, banks and financial institutions are barred from suddenly charging them back interest at the original rate–any interest over the 6% cap is forgiven.

Banks and financial institutions are also not allowed to repossess vehicles from an auto loan or lease, or foreclose on mortgages while a servicemember is away on active duty.

Violations of the SCRA interest rate cap or these other issues may lead to banks facing serious penalties amounting to tens of thousands of dollars—not to mention potential millions from a class action lawsuit settlement agreement.

One member of the military, Gary C., let Bank of America know that he  was going on active duty so that they would reduce his interest rates on debts to 6%. Given his family’s approximately $5,000 credit card debt, and the initial interest rate of 27%, this SCRA benefited his family immensely.

Unfortunately, the bank continued charging a much higher rate, according to a recently-settled SCRA class action lawsuit. And Gary’s family was not the only one affected by this alleged violation of the SCRA. Other servicemembers have reportedly been reduced to bankruptcy because of SCRA violations.

Gary’s family and others like them filed their class action lawsuit in 201. In July 2017, they finally reached a nearly $30 million class action settlement.

Filing an SCRA Interest Rate Cap Lawsuit

Several banks and other financial institutions have been hit with SCRA interest rate cap class action lawsuits for allegedly overcharging military members. Bank of America, for instance, is currently facing a $42 million class action settlement. The SCRA class action lawsuit claims that the bank overcharged service members and their families on interest rates and fees from mortgages and credit cards while on active duty. Moreover, the lawsuit claims that Bank of America attempted to hide these violations of the SCRA. A similar class action hit CitiMortgage back in 2015 for allegedly overcharging interest.

This spike in SCRA interest rate cap lawsuits occurred after the Department of Justice charged several major banks with SCRA violations in 2015.

If you are a member of the military and believe you may have been overcharged for interest rates while away on active duty, or your bank tried to collect excess interest once you returned from active duty, you may be able to file a SCRA interest rate cap lawsuit or class action lawsuit.

Join a Free Military Interest Rate Class Action Lawsuit Investigation

If you are a member of the military and you were overcharged (or think you may have been) for interest rates above 6 percent while on active duty, or your bank or credit card tried to collect on interest owed after you returned from active duty, you may qualify to file a SCRA interest rate lawsuit or class action lawsuit. Other predatory financial practices that may have exploited your military status may also qualify you to bring a legal claim.

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