Office of the Comptroller of the Currency Announces $30 Million Civil Penalty Against National Bank Over SCRA Violations

Banking  •  Credit Cards  •  Debt Collection  •  OCC  •  SCRA  •  Student Loans

On August 21, 2015, the Office of the Comptroller of the Currency announced that it had concluded its investigation into several related national banks regarding alleged violations of the Servicemembers Civil Relief Act. The Act prohibits certain debt collection activities against members of the armed forces. Before proceeding with judicial collection activities, such as foreclosure or garnishment, the Act requires lenders to file affidavits stating that the debtor is not an active duty military member. The affidavit must be based on the affiant’s personal knowledge or personal review of relevant records demonstrating that the debtor is not active duty military personnel.  According to the OCC, the banks’ employees failed to complete the necessary investigation regarding the debtors’ military status but falsely represented that they had done so when they filed the affidavits in court. The banks also allegedly failed to properly supervise third-party contractors, including counsel and other collections agents, who also falsely represented that they had completed the required investigation. These inaccurate affidavits allegedly permitted the banks to obtain judgments against military personnel in violation of the Act. The OCC also alleged that the banks failed to devote sufficient resources and internal oversight to its debt collections programs.

The alleged violations were most prevalent in the banks’ credit card, auto lending, and student lending divisions. Although the banks did not admit wrongdoing, they agreed to a collective civil monetary penalty of $30 million.

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