Consumer complaint received 2022-08-10
Company: NAVY FEDERAL CREDIT UNION
State: TN
Product: Payday loan, title loan, or personal loan
Sub-product: Personal line of credit
Issue: Charged fees or interest you didn't expect

Complaint:
I am submitting this claim for a SCRA violation against Navy Federal Credit Union. 

I am a XXXX XXXX and took out a personal loan back in the fall of XXXX when I was on XXXX XXXX over 31 days. Those orders ended on XXXX XX/XX/XXXX. I then obtained new orders on XXXX XX/XX/XXXX and have mostly remained on XXXX XXXX since the beginning of the calendar year. 

When I applied for SCRA benefits to my account, I was instructed by XXXX XXXX, via a XXXX XXXX letter, that SCRA benefits could not be applied because " [ l ] oans opened during XXXX military service are not eligible for SCRA coverage and/or a reduction in interest rate. '' When I called about the request, I spoke with a Navy Federal SCRA representative. She directed me to a provision in the DOJ 's SCRA Guide, which states as follows : " The SCRA limits the amount of interest that may be charged on certain financial obligations that were incurred prior to military service to no more than six percent per year, including most fees. 50 U.S.C. 3937 ( a ) ( 1 ) & ( d ) ( 1 ). '' Her position was that because I took on the loan while on XXXX XXXX, my loan will forever be barred from SCRA protections. I disagree because Navy Federal 's interpretation is too limiting. 

My orders for the period in which I took out the underlying loan ended on XXXX XX/XX/XXXX. My new orders, dated XXXX XX/XX/XXXX, is a new period of " military service '' and thus all previously incurred debt is subject to the 6 % limitation. 

Under 3937 ( a ) ( 1 ), " [ a ] n obligation... bearing interest as a rate in excess of 6 percent per year that is incurred by a servicemember... before the service member enters military service shall not bear interest at a rate in excess of 6 percent.... '' Under 3911 ( 2 ) ( A ) ( i ), " Military Service '' is defined as " in the case of a servicemember who is a member of the... Air Force... active duty, as defined in section 101 ( d ) ( 1 ) of Title 10 [, ] '' which states, in turn, that " 'active duty ' means full-time duty in the active military service of the United States. Such term includes full-time training duty, annual training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned. Such term does not include full-time National Guard duty . '' Thus, because my military service ended with my orders on XXXX XX/XX/XXXX, and I entered a new period of military service on XXXX XX/XX/XXXX, then SCRA should apply because I took out the present loan before I entered the present military service. 

I would note that nothing in the plain language of the statute bars application of SCRA benefits to my case. Moreover, under the DOJ 's SCRA Guide, [ t ] he Act [ SCRA ] must be read with an eye friendly to those who dropped their affairs to answer their countrys call. Le Maistre v. Leffers, 333 U.S. 1, 6 ( 1948 ) ( citing Boone v. Lightner, 319 U.S. 561, 575 ( 1943 ) ). Restated, the SCRA should generally be read in favor of the servicemembers it is intended to protect. See id. 

If you have questions or would like to discuss, please feel free to contact me. 

Best, XXXX XXXX

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation