Consumer Protections for Veterans & Military Personnel

A priority for the Attorney General's Office is to safeguard consumers from deceptive and unfair business practices. Unfortunately, military service members and Veterans can be targets for scam artists and unscrupulous businesses.

The information provided in the links below relates to consumer laws and protections unique to Veterans and military service members:

• Servicemembers Civil Relief Act
• Credit & Debt
• Motor Vehicles
• Guarding Against Fraud & Scams
• Consumer Complaints

The office's Consumer Protection Division provides additional information on a wide range of general consumer issues, including some not discussed below, at www.atg.wa.gov/consumer-issues.

If you have questions or need assistance resolving a particular consumer problem, please contact the Attorney General's Consumer Resource Center at 1-800-551-4636 (M-F 10:00 a.m. to 3:00 p.m.). You can also file a written consumer complaint online at www.atg.wa.gov/file-complaint.

The Servicemembers Civil Relief Act (SCRA) is a federal law providing protections for military service members active in federal service. The SCRA defines "servicemembers" as those who are on federal active duty in the Armed Forces of the United States. The law also applies to members of the National Guard and Reservists called to federal active duty for more than 30 consecutive days. State law (RCW 38.42) is similar, and provides protections for military service members in active state service.

These laws postpone or suspend certain obligations to allow active duty members of the Armed Forces to focus their full attention on their military responsibilities without adverse consequences for them or their families. Examples, described in more detail below, include caps on interest rates, rights to terminate residential or automobile leases, and protections against repossession.

It is illegal for you to be retaliated against for asserting your SCRA rights. If you think your rights under the SCRA may have been violated, you should contact your nearest Armed Forces Legal Assistance Program office.

In 2014, the State Legislature granted the Attorney General's Office authority to enforce SCRA laws in support of Washington's military families. Individuals concerned their SCRA rights may have been violated should also file a consumer complaint.

The federal SCRA allows service members to cap the interest rates on most of their preexisting loans or obligations at 6% per year while on active duty. The 6% interest rate cap applies to mortgages, credit cards, car loans, other installment loans, and some student loans. "Interest" includes fees and other charges.

The federal SCRA interest rate cap does not apply to new debts or obligations you incur while on active duty.

To qualify for the 6% interest rate cap:

• The service member must currently be on active duty;
• The debt must have been incurred prior to entering active duty; and
• Military service materially affects the service member's ability to pay.

To initiate the interest rate reduction, the service member must:

• Send a written request to the lender;
• Show how military service materially affects the service member's ability to pay; and
• Include a copy of his or her military orders.

The request to the lender may be sent any time during active duty and up to 180 days after release from active duty. All interest in excess of 6% is forgiven during the covered period and cannot accrue or become due after service. A sample SCRA interest reduction request letter is available here.

The federal SCRA allows active duty service members to terminate an automobile lease without having to pay early termination charges if:

• The lease was entered into prior to active duty, when the service member is called to active duty for 180 days or longer; or
• The lease was entered into during active duty, when the service member receives a permanent change of station outside the continental United States or will deploy with a military unit for 180 days or longer.

To terminate the lease, the service member must:

• Provide written notice of the termination;
• Include a copy of his or her military orders; and
• Return the vehicle within 15 days.

Service members cannot be charged extra fees for the early cancellation of the lease. However, service members can still be charged taxes, title, registration, and other fees, including charges for excessive wear and mileage due or unpaid on the date of the lease termination. Any advance payments made by the service member must be refunded within 30 days of the lease termination. A sample SCRA automobile lease termination letter is available here.

The federal SCRA allows active duty service members to terminate a cell phone contract without having to pay early termination charges if:

• The service member receives military orders to relocate to a place where the service provider does not provide coverage under the contract; and
• The service member will be in that location for 90 days or more.

To terminate the contract, the service member must:

• Provide written notice of the termination; and
• Include a copy of his or her military orders.

The termination is effective on the date the service provider receives notice. The law allows service members to retain their phone number. Family plans may be canceled if the family moves with the service member.

The federal SCRA limits creditors from repossessing personal property, including automobiles, of active duty military personnel without a court order. A court order is required if the service member purchased or leased property and made a deposit or installment payment on the property before entering service. This protection does not apply to property purchased after entering active duty status. A court may stay repossession proceedings if a judge finds that the service member's ability to comply with the contract is materially affected by military service.

FOR RENTERS

Eviction Protection: The federal SCRA protects active duty service members and their dependents from being evicted without a court order. To qualify for this protection:

• The home must be occupied or intended as a primary residence; and
• The monthly rent must be below the current rent ceiling ($3,851.03 in 2019; adjusted annually for inflation).

If an eviction action is filed, the SCRA gives service members or their dependents the right to ask the court for a temporary stay of the proceedings for three months. Alternatively, the court may adjust the amount of the financial obligation to preserve the interests of all parties.

Residential Lease Termination: The federal SCRA allows active duty service members to terminate a residential lease if one of the following circumstances applies:

• The lease was entered into prior to active duty, when the service member is called to active duty for 180 days or more; or
• The lease was entered into during active duty, when the service member receives orders for a Permanent Change of Station or to deploy with a military unit for more than 90 days.

To break a lease under the SCRA, a service member must deliver written notice to the landlord with a copy of the military orders. With proper notice, the effective date of termination is 30 days after the date on which the next rental payment is due. A sample SCRA lease termination letter is available here.

FOR HOMEOWNERS

If a service member obtained a mortgage prior to active duty, the federal SCRA requires that a mortgage lender get a court order before it can foreclose on that service member's home during any period of military service and for one year thereafter. If a lender seeks such an order, the court may temporarily stay the proceedings or adjust the amount of the service member's obligation when it can be shown that military service impacted the service member's ability to meet the financial obligation.

Managing credit and debt is important for everyone, including military service members. Not only can poor credit and excessive debt result in higher interest rates, it can also prevent an individual from obtaining or retaining a security clearance. The Attorney General’s Office provides consumer information about credit and debt at www.atg.wa.gov/credit-debt.

A credit report includes information on where you live, how you pay your bills, and whether you have been sued or have filed for bankruptcy. Businesses use the information in a credit report to evaluate applications for credit, insurance, employment, and renting or buying a home.

GET A FREE COPY OF YOUR CREDIT REPORT

The federal Fair Credit Reporting Act requires each of the nationwide credit reporting companies — Equifax, Experian, and TransUnion — to provide an individual with a free copy of his or her credit report once every 12 months upon request. The only official site through which to order a free annual credit report is www.annualcreditreport.com.

For security reasons, annualcreditreport.com does not work outside the U.S. and its territories. Service members stationed outside the U.S. or deployed overseas can order a free copy of their credit report by mailing a completed request form or calling 1-877-322-8228.

ACTIVE DUTY ALERTS

Under federal law, a deploying service member can place an “active duty alert” on his or her credit report at no cost. The report helps minimize the risk of identity theft during deployment. An active duty alert on a credit report means businesses must take extra steps before granting credit in the service member’s name. Active duty alerts last for one year and can be renewed to match the period of deployment.

To place an active duty alert, a deployed or deploying service member should contact any one of the three nationwide credit reporting companies:

• Equifax: 1-800-525-6285, www.equifax.com
• Experian: 1-888-397-3742, www.experian.com
• TransUnion: 1-800-680-7289, www.transunion.com

The federal Military Lending Act requires that certain types of consumer credit offered to active duty service members and their dependents include certain protections. Under the law:

• Lenders are prohibited from securing the loan by holding a check or car title, or obtaining access to a bank account;
• A clear description of payment obligations and other disclosures must be provided;
• The loan terms cannot include mandatory arbitration clauses or waivers of legal rights; and
• Interest rates and most fees are capped at an annual percentage rate of 36%.

The federal Consumer Financial Protection Bureau (CFPB) enforces the Military Lending Act and other federal consumer financial laws. More information about the CFPB, including directions for filing a complaint, is available online at www.consumerfinance.gov.

In addition to federal protections, military borrowers of payday loans or “small loans” in Washington have protections under state law (RCW 31.45.210). State law provides that payday lenders:

• Cannot garnish any wages or salary paid for service in the Armed Forces when attempting to collect a delinquent loan;
• Cannot contact the military chain of command to try to collect a delinquent loan;
• Must defer all collection activity during the time the borrower is deployed to a combat or combat support posting; and
• Must honor the terms of any repayment agreement made with the borrower, military counselors, or third-party credit counselors.

Washington’s Collection Agency Act (RCW 19.16) and the federal Fair Debt Collections Practices Act govern the practices of “collection agencies,” which are businesses that collect debts for other businesses. These laws do not apply to businesses trying to collect on their own past-due accounts.

It is important to remember that while there are no military-specific provisions, military service members have the same rights under laws governing debt collection as civilian consumers. For example, a debt collector may contact an individual’s supervisor, but only to find out where the person lives, his or her phone number, and where the individual works. A debt collector may not tell the individual’s supervisor that a debt is owed and typically may only contact the supervisor once. Military service members who have collection agencies repeatedly contacting their commanding officer should consider filing a consumer complaint.

The Federal Trade Commission has more information about rights established under federal debt collection laws at www.consumer.ftc.gov.

For military personnel and Veterans, just like for other consumers, a car—new or used—is one of the most expensive purchases they make. Unfortunately, auto sales and financing scams are among the leading causes of financial problems for military service members.

Before beginning the process of obtaining a new, used, or leased car, it is important to identify your needs and budget. The more you know as a consumer, the less stressful and confusing the car buying process can be. A persistent myth of consumer law is that car buyers have a three-day “cooling off” right to cancel a motor vehicle purchase, but there is no three-day right of cancellation in Washington. It is also important to remember that you have the right to shop around and compare financing and warranty options. The Attorney General’s Office provides information to help consumers understand their rights, and tips and suggestions to keep in mind when buying a car. For additional information, visit www.atg.wa.gov/cars-0.

In addition to general information about the car buying process, the Attorney General’s Office maintains a list of common misleading tactics used by unscrupulous car dealers, many of which are Consumer Protection Act violations. When buying a car, knowing what to watch out for can significantly decrease the odds of falling victim to those trying to take advantage of consumers and their families.

The Washington State Motor Vehicle “Lemon Law” (RCW 19.118) helps new vehicle owners who have substantial continuing problems with warranty repairs. Your new vehicle may qualify as a “lemon” if it has at least one significant defect that has been subject to a reasonable number of attempts to diagnose or repair the problem covered under the manufacturer’s warranty. The law allows the owner to request a free arbitration hearing through the Lemon Law Administration of the Attorney General’s Office. An arbitration decision favorable to the consumer may result in the lemon car being replaced.

For more information, call the Attorney General’s Lemon Law Administration toll-free at 1-800-541-8898 or visit www.atg.wa.gov/lemon-law-0.

If you are in the military and assigned to duty or living in Washington, a new vehicle brought with you from another state is covered by Washington’s Lemon Law if it was purchased or leased with a manufacturer’s written warranty within the last 30 months, and if it meets the other standards and eligibility requirements.

Warning about common scams to watch out for is an important part of what the Office of the Attorney General does to help safeguard Washington consumers. More information and the latest news are available at: www.atg.wa.gov/scam-alerts.

Unfortunately, some scammers try to take advantage of our nation’s Veterans and service members by targeting them or by treading on their goodwill. Below are some examples of scams involving or targeting Veterans and military personnel.

This scam involves “poaching” Veterans’ pensions. Unscrupulous “advisers” selling financial or legal products try to convince Veterans to transfer their assets to a trust or invest in insurance products, alleging that they will then qualify for federal Department of Veterans Affairs (VA) pension benefits. What these “advisers” don’t say is that there are no guaranteed VA benefits, Veterans can get free assistance to file VA benefit claims, and such asset restructuring may have serious consequences, including lost Medicaid eligibility. For more information, visit www.consumer.ftc.gov/articles/0349-veterans-pensions.

In response to this scam, the Attorney General’s Office worked with the State Legislature to pass the Washington Pension Poacher Prevention Act (RCW 19.335). This law:

• Prohibits individuals from taking compensation for assisting a Veteran with a benefit claim, except as allowed under the VA’s rules for accreditation;
• Prohibits individuals from guaranteeing a specific benefit amount;
• Prohibits the misuse of personal and financial information gathered for the purposes of assisting a Veteran with a benefit claim; and
• Gives the Attorney General’s Office enforcement authority through the state’s consumer protection laws.

You can report suspected violations of the Pension Poacher Prevention Act by filing a consumer complaint.

Pension advances—or pension sales, loans, or buyouts—are another growing concern. In exchange for an upfront, lump sum cash payment, pensioners give up all or some of their monthly pension checks for a period of time. In many cases, the upfront cash is provided by individual investors who are drawn to the promise of a low-risk investment that provides returns at attractive interest rates. But pension advances often include costly and misunderstood fine print, such as interest rates as high as 106%. In some cases, borrowers are required to take out a life insurance policy and name the pension advance company as the sole beneficiary to ensure payment. Make sure you understand all the details and costs before jeopardizing your financial future.

Identity theft happens when someone steals your personal information and uses it without your permission. Keeping your personal information secure and knowing what steps to take if your information is compromised can help prevent and minimize harm from identity theft. More information and links to additional resources are available at www.atg.wa.gov/guardit.aspx.

Be on guard for scammers who send Veterans and military personnel (or their spouses) unsolicited emails or text messages that appear to be from the military or VA. These types of phony emails mimic official entities, but solicit money, financial information, or personal data, such as social security numbers or credit card information. The scammers then use that information to commit identity theft.

This is a variation on a common scammer trick; fooling someone into thinking they have to pay for something they could otherwise get for free or less expensively. Instead of having to pay, most Veterans and next-of-kin can receive free military records. The Washington State Department of Veterans Affairs has links for accessing records on their website at www.dva.wa.gov/program/veterans-records.

Many legitimate charities solicit donations to support the nation’s Veterans and military families. However, not all “charities” are legitimate. Some are sham operators whose only purpose is to make money by taking advantage of the goodwill afforded the men and women of our Armed Forces. More information on charitable organizations and fundraisers is available online at www.atg.wa.gov/charities.