Servicemembers Civil Relief Act Violations

Class action attorney reviewing violations of the Servicemembers Civil Relief Act and representing U.S. military active duty service members and plaintiffs nationwide

U.S. Military servicemembers have filed class action lawsuits against banks and other institutions that have violated the Servicemembers Civil Relief Act (SCRA). The SCRA helps servicemembers to postpone or suspend financial or civil obligations to prevent them from being taken advantage of while on active duty.

The act currently covers rental agreements, security deposits, pre-paid rent, evictions, installment contracts, credit card interest, mortgage interest, mortgage foreclosures, civil judicial proceedings, auto leases, life insurance, health insurance, and income tax payments.

The SCRA guarantees that all debts incurred by a servicemember before being called to active duty are reduced to a 6 percent interest rate, and requires banks and financial institutions to permanently forgive interest above 6 percent.

All active duty military members are covered by the law, including those in the Coast Guard, reserves and National Guard, as well as officers in active service of the Public Health Service and the National Oceanic and Atmospheric Administration. The SCRA also provides certain benefits and protections to servicemember dependents in some instances in co-signing a loan.

Under the SCRA, plaintiffs may file a federal lawsuit against any person or entity that violates the law. When a SCRA class action lawsuit is filed, plaintiffs’ attorneys may seek monetary damages on behalf of individual service members.

Joe Lyon is an experienced Cincinnati, Ohio class action lawyer currently offering free and confidential consultations. The Lyon Firm is involved in a variety of civil litigation and is proud to represent military veterans and active duty servicemembers.

What is the SCRA?

The SCRA, first enacted in 2003, has been amended several times since. Originally, the law was an extension of the Soldiers’ and Sailors’ Civil Relief Act of 1940 (SSCRA), a law designed to ease financial burdens on servicemembers during periods of military service. 

The SCRA covers all active duty service members, reservists and the members of the National Guard while on active duty. The protection begins on the date of entering active duty and terminates within 30 to 90 days after discharge.

In order to have the interest rate on a financial obligation such as a credit card or a mortgage capped at six percent per year, a servicemember must provide the creditor with written notice and a copy of his or her military orders, and must be provided to the creditor within 180 days of the end of the servicemember’s military service.

The creditor in turn must forgive – not defer – interest greater than six percent per year, and must forgive this interest retroactively.  Creditors are also prohibited from accelerating the payment of principal in response to a properly made request for a six percent interest rate cap.

Servicemembers Civil Rights Act Protections

Protections & Benefits offered by the SCRA include the following:

• Eviction protection, unless rent is higher than $3,991.90 per month (2020 amount)
• No foreclosures without a court order
• Vehicles cannot be repossessed without a court order if at least one payment or a deposit was made
• Protection against civil proceedings, including divorce and child support hearings
• Self-storage facility rent protections
• Ability to terminate telecom contracts (telephone, cable, internet) if relocated to a location that doesn’t have coverage under the current provider
• Ability to end a vehicle lease signed before joining service or deployed
• Ability to end a housing lease without penalty
• All loans taken out before joining the military are limited to a 6 percent interest rate.
• Any service member who uses their SCRA rights to delay payments cannot be penalized on credit reports

Chase Bank Class Action

A $62 million deal was reached with Chase Bank over allegations that the financial institution overcharged a class of servicemembers under the bank’s SCRA program. There are an estimated 185,000 class members.

The Chase settlement, if approved, will conclude a lawsuit filed in 2016 by several servicemembers that alleged JPMorgan Chase Bank charged illegal high interest rates and imposed improper fees on the debts of thousands of U.S. servicemembers. Under the proposed settlement’s terms, Chase disputes the claims and does not admit any liability or wrongdoing.

The cash settlement of over $62 million covers all compensation to the class members, attorney fees and costs, service awards and administrative costs.

According to the lawsuit, JPMorgan Chase Bank and some of its affiliated entities allegedly offered benefits that were more generous than required by the SCRA, but then failed to properly reduce the interest rate on applicants’ credit card accounts as required by the SCRA.

The Lyon Firm is a highly-rated boutique law firm with experience engaging corporations in litigation when their behavior is unlawful or unethical.

Servicemembers and their families sacrifice a great deal for the country, and have rights that must be protected at all costs. Call Joe Lyon if you or a loved one has been treated unfairly by a bank or financial institution while on active duty.