The Servicemembers Civil Relief Act (SCRA) aims to protect members of the Armed Forces from unfair and harmful practices that jeopardize their financial well-being while deployed. It shouldn’t be surprising then, that failing to adhere to those protections is frowned upon by federal regulators. Just ask Bank of America, which is now on the hook for $30 million stemming from SCRA violations related to more than 73,000 servicemember accounts.
The Office of the Comptroller of the Currency announced that Bank of America must pay the hefty fine and provide remediation to the affected customer accounts after an investigation found the bank violated SCRA when it came to collecting debts from military customers.
According to the OCC consent order [PDF], since 2006 Bank of America took improper legal action against military customers for delinquent credit card accounts and overdrafts.
In many cases, investigators found that deficiencies in BofA’s enterprise compliance risk management function led to unsafe and unsound practices and violations of SCRA.
For example, the investigation found that when the bank filed legal action against military customers to collect debts, employees asserted in affidavits that they had personal knowledge of the alleged delinquencies, when in fact they didn’t.
In other cases, according to the OCC filing, employees filed court documents without the proper notarization.
Additionally, the institution failed to devote sufficient financial, staffing and managerial resources to ensure proper administration of its legal documentation and to overseeing outside counsel and other third-party providers handling those documents.
Under the consent order, the bank is required to strengthen its oversight of military member accounts to prevent future violations of SCRA.
Bank of America must also improve its SCRA-compliance policies and procedures for determining whether “military personnel are eligible for requested SCRA-related benefits, for ensuring that the bank calculates the SCRA benefits correctly, and for verifying the military service status of servicemembers prior to seeking or obtaining default judgments on non-home loans.”
The New York Times reports that while the bank did not admit any wrongdoing with regard to the OCC’s findings, it has taken steps to amend its SCRA weaknesses.
“We have taken significant steps over the last several years, and will take further steps now, to ensure we have the right controls and processes in place to meet – and exceed – what is required by law and what our military customers deserve and expect,” the company said in a statement.
OCC Takes Action Against Bank of America to Protect Consumers and to Ensure Servicemembers Receive Credit Protections for Their Non-Home Loans [Office of the Comptroller of the Currency]
Bank of America Fined for Violations of Military Relief Law [The New York Times]