In the aftermath of the economic crash nearly a decade ago, the Consumer Financial Protection Bureau (CFPB) was created in 2011. Still, the question remained: How would consumers receive the help they needed as the U.S. economy began to recover from its most severe setback since the Great Depression?
“There were a number of good federal consumer financial laws on the books, but the enforcement of those laws was spread out among seven different federal agencies,” said Holly Petraeus, a CFPB assistant director who oversees the division responsible for helping veterans, servicemembers and their families. “The president and the Congress decided one thing they could do would be to create a new federal agency and give it the mission of protecting consumers, and migrate the enforcement of those consumer financial laws over to that new agency.”
The CFPB, which offers a collection of free programs and resources, has the backs of consumers.
“We're here to make the markets work for consumers so they can see the costs and risks of products up front,” Petraeus said. “We have the power to both enforce the laws that are out there and also to write rules related to those laws.”
In the five years of the CFPB’s existence, it has returned almost $12 billion to U.S. consumers, including $200 million to veterans and servicemembers. There is a dedicated web page for veterans and servicemembers where they can access information, resource and file a complaint.
Capt. John Jamison learned of the CFPB’s impact in 2012 when he was an Air Force judge advocate general at Ellsworth Air Force Base in South Dakota. As a JAG officer, he provided legal assistance to active-duty servicemembers and veterans.
Jamison recalled when an E7 (master sergeant in the Air Force) sought help. The master sergeant was being transferred to another duty station and was concerned because his family owned a home near Ellsworth and another one back at their previous duty station. They owed more on the latter house than it was worth so he wanted to do a short sale.
“As a military member we have an obligation to pay our debts, so he was being a good military member and he was being a good steward of the loan in that he was continuing to pay the debt, but he wanted a short sale,” Jamison said. “Often times to get a short sale, the mortgage lender will require you to have a hardship or they will require you to be delinquent in your loan payments. And honestly, he did not want to be delinquent, because once you become delinquent it really ruins your credit score and additionally it allows them to foreclose on you.”
The master sergeant’s request for a short sale had been denied by his bank. So Jamison contacted the CFPB’s Office of Consumer Response on his behalf. “We had a correspondence where we gave them the information they needed and then about two weeks later, the bank reached out to say, ‘Your short sale’s approved,’” he said. “The CFPB had worked a kind of miracle in about two weeks, something that neither he nor I had been able to accomplish in about nine months.”
Petraeus lists three main priorities for her office. The first is to ensure that servicemembers and their families get the financial education they need to make informed consumer decisions. “When I say ‘servicemembers,’ the law says that's active duty, National Guard, and reserve, but I also include retirees and veterans in who my office serves, because I think if you've worn the uniform, my office should serve you,” she says.
The second part is to monitor and react to the complaints from servicemembers and veterans. And the third is to work with other federal and state agencies on consumer protection measures for the military.
“When it comes to veterans, for example, I've done a lot with the state directors of Veterans Affairs,” Petraeus said. “We work with the nonprofits, the military and veterans service organizations like The American Legion, and also have done quite a lot with the state Attorneys General. Each state has an AG who is their chief law enforcement person, and they do a big consumer protection role, so we work with them as well.”
Outreach is also a priority for the agency. Petraeus says that her office has visited 130 military installations, as well as veterans service organizations and others. During these visits, CFPB staff learn of scams and issues affecting veterans.
“One issue that was brought up to me pretty regularly was the scammers using VA benefits as a hook to get into the finances of veterans,” Petraeus said. “Offering to help with benefits claims, sometimes charging for them, which they are not, of course, supposed to do. Often some scammers got into their finances, telling them they could qualify for benefits like aid and attendance. And if the veterans had too much money, (the scammers would do) a lot of finagling to move their money somewhere inaccessible so they could pretend that they didn't have much money in some cases. I remember reading about one annuity that was set up so the veteran wasn't able to access it until he was in his 90s.”
The CFPB also puts an emphasis on transitioning servicemembers, helping them navigate the Transition Assistance Program. “We really felt that there wasn't a warm handoff to a trusted financial coach after they left, and maybe realized that that financial plan that they created in TAP wasn't going to work in the real world for a variety of reasons,” she said. “That expected salary didn't happen, all the expenses that they had not thought about associated with living in the civilian world, turned out to be more than they thought.”
Now, CFPB has certified financial coaches at 40 locations nationwide, stationed at Department of Labor American Job Centers. “The Department of Labor was quite enthusiastic about it,” Petraeus said. “They have a gold card program for veterans where veterans go to the head of the line. They said to have a coach like this sitting in one of their job centers would just be a further enhancement for them.”
The coaching program, as well as other CFPB initiatives, is free for veterans and servicemembers. But the payoffs can be substantial.
Petraeus mentioned that one of her division’s earliest successes was winning a judgment that forced a subprime auto lender to reimburse 60,000 servicemembers.
“Individually, it was a small amount of money, but it sent a message,” she said. “Sometimes, if we see trends but it's not something that we enforce, we know the people who do, and we may refer to them. We got a lot of complaints about the federal student loan servicer Sallie Mae, and ultimately, we referred those to the Department of Justice, and that resulted in a settlement of $60 million to 77,000 servicemembers and veterans.”
The agency has a trail of large settlements and individual successes.
“The CFPB is an incredible resource,” Jamison said. “And if servicemembers are having issues, they should absolutely reach out to see if the CFPB could help. I know actually personally, they also helped me. I had an issue with a student loan and they were able to help me get my student loan issue resolved. So, in essence, they’re just a fantastic resource for servicemembers. It’s very easy to make a complaint on their website and reach out to get help.”