Sen. Tom UdallTom UdallPaul, Lee call on Trump to work with Congress on foreign policy Senate takes first step toward repealing ObamaCare Tillerson discloses assets worth up to 0M MORE (D-N.M.) led a group of Senate Democrats in calling for the Consumer Financial Protection Bureau (CFPB) to protect military service members from “abusive loan contracts.”
In a letter Udall released on Thursday, the group of six senators said CFPB Director Richard Cordray and Federal Trade Commission (FTC) Chairwoman Edith Ramirez should tweak the Fair Debt Collection Practices Act (FDCPA) to protect service members.
The senators cited a ProPublica report that showed the business USA Discounters is using a loophole in FDCPA to sue service members in a court where they cannot defend themselves because they are deployed or stationed somewhere else. The CFPB responded promptly.
USA Discounters required borrowers to agree that any resulting legal action could be brought in a single court in the same location as the company headquarters, regardless of where the transaction takes place or where the service member lives. The business has reportedly won thousands of default judgments against service members because they couldn’t show up for the trial.
The senators said this goes against the purpose of the FDCPA, which allows legal action against consumer to take place wherever the contract was signed of where the consumer lived when it was signed.
“Courts ought not to be issuing or enforcing judgments in cases that are brought through the use of such unfair practices, and your agencies have a role in ensuring that they do not do so,” the letter stated. “Suing consumers in places far away from where they live is clearly an unfair practice (UDAP) that your agencies have the power to explicitly prohibit for original creditors, as well.”
Since the letter was sent, CFPB stopped USA Discounters, citing the Servicemembers Civil Relief Act and obtaining more than $350,000 in refunds for service members.
Sens. Richard Blumenthal (D-Conn.), Mazie Hirono (D-Hawaii), Tim Kaine (D-Va.), Ed Markey (D-Mass.) and Mark Warner (D-Va.) also signed the letter, which was sent earlier this month.
— This post was updated at 5:40 p.m.