MILITARY CONSUMER FINANCIAL WORKSHOP

STAFF PERSPECTIVE | FEBRUA R Y 2018

A CLOSER LOOK AT THE 

FTC BUREAU OF CONSUMER PROTECTION FTC.GOV

Introduction 

Military servicemembers and veterans dedicate themselves to serving their country and 

protecting all of us, and the FTC has long been active in helping to protect these military 

consumers and their families. As part of these efforts, on July 19, 2017 in San Antonio, Texas, 

we brought together stakeholders to examine a wide array of financial issues and scams that 

military consumers confront. Panelists and other speakers at the day-long event – military 

consumer advocates and representatives from military legal services and veterans law clinics, all 

service branches, government, and industry – discussed financial concerns and potential 

remedies and resources for military consumers. 

As Acting Chairman Ohlhausen noted in her opening remarks, “Financial issues . . . can hit 

military consumers particularly hard. The demands of deployment and frequent relocations, 

among others, pose unique concerns for servicemembers and . . . do not diminish once [they] 

leave active service.” The FTC received over 103,000 complaints from servicemembers, veterans 

and their families in 2016, including complaints about scams targeting them. To combat these 

problems, the Commission has used a multi-faceted approach that includes bringing enforcement 

actions protecting military consumers (such as in recent actions against online diploma mills), 

engaging in education initiatives to help military consumers detect and avoid scams (such as 

through the FTC’s MilitaryConsumer.gov website), and coordinating agency-wide efforts 

through its military task force. Additionally, the FTC’s Economic Liberty Task Force continues 

to address unnecessary or overbroad occupational licensing requirements that hit military 

consumers, especially military spouses, particularly hard, in order to open more economic doors 

for military consumers and their families.

In this staff perspective, we highlight key takeaways in several areas covered by the workshop – 

including potential issues and approaches for military consumers in the areas of auto purchase 

and finance, debt collection, and credit decisions, as well military consumers’ legal rights, and 

strategies to promote financial literacy and capability. 
A Closer Look At The Military Consumer Financial Workshop | Staff Perspective

2

Key Takeaways 

Auto: One point we heard from our panelists is that servicemembers face a number of 

challenges in auto transactions – particularly servicemembers buying or leasing a vehicle for the 

first time. An automobile purchase may be servicemembers’ first big, complex financial 

transaction. They might not have much time or ability to shop around and compare deals, though 

as one panelist noted, they tend to be savvy in using mobile devices to shop. Some military 

representatives observed that young soldiers are taught to trust authority, which is crucial for 

military readiness, and they can have a tough time temporarily “turning off boot camp training,” 

which may make it less likely that they will ask questions and closely scrutinize offers presented 

to them. Also, servicemembers’ steady paychecks can make them attractive customers for 

dealers, while having no or minimal credit history means they may only qualify for less 

advantageous credit terms and higher interest rate financing. It’s important for servicemembers 

to prioritize their financial goals, shop around, and scrutinize their options when figuring out 

what kind of vehicle to buy or lease and negotiating price and finance terms (as other consumers 

should do as well). As some panelists noted, servicemembers can benefit from consulting 

available financial counselors on their base before – not just after – a financial transaction like an 

auto purchase; they can provide advice to help servicemembers plan in advance for financial 

issues, develop effective financial strategies, and understand their financing options and legal 

rights. The FTC also has available helpful publications on this topic. 

Another point for servicemembers to consider, as military representatives observed, is whether to 

purchase add-on products and services during the sale process. Car buyers, including military 

consumers, should look closely at any products offered and the cost. The FTC has brought cases 

to protect consumers against alleged deceptive add-on practices (for example, Matt Blatt Inc. and 

NPN).

And when servicemembers or their families need to replace a vehicle, they also may find 

themselves with negative equity and outstanding balances still due; if they trade in that vehicle, 

the outstanding amount may end up wrapped into their new financing. Servicemembers should 

consider that cost and understand how the dealer will treat negative equity on a trade-in. As 

industry representatives and others observed, the FTC has brought cases to address alleged 

deceptive practices in the negative equity area (for example, Billion Auto, Ramey Motors, and 

Trophy Nissan).

Debt Collection: Servicemembers can run into unique issues if they fall behind on their 

financing payments and have to deal with debt collection. If this happens, one key issue is the 

servicemember’s security clearance. When a servicemember is being considered for a new or 

renewed security clearance, security managers check the servicemember’s credit file. Debts in 

collection and other negative information in the file can endanger the servicemember’s security 

clearance, and cause a suspension (and potential denial) in the process of issuing or renewing the 

clearance. Military consumers have short timeframes to address these problems – usually 60 days 

– and military counselors are available to work with them if they seek out assistance. For 

example, panelists noted that, when a debt collector threatens a servicemember’s security 

clearance, it’s best for the servicemember to work with a military-affiliated personal financial 

manager or personal financial counselor, or another other military financial advisor, to have the 
A Closer Look At The Military Consumer Financial Workshop | Staff Perspective

3

debt removed from the servicemember’s credit file if it is not actually owed or, if it is owed, to 

provide written proof to the security manager that the servicemember is paying off the debt.

Panelists also noted that debt collectors sometimes threaten to tell a servicemember’s 

commanding officer – or actually do tell the officer – about an alleged debt, in hopes of pushing 

the servicemember to pay. This tactic can make servicemembers fear for their jobs and affect 

their readiness. As industry representatives noted, however, the Fair Debt Collection Practices 

Act generally prohibits debt collectors from talking with anyone but the consumer who allegedly 

owes the debt without the consumer’s permission. So, if a collector tells the commanding officer 

about alleged debts or threatens to do so, it is important for servicemembers to know that this 

tactic is usually illegal and file a complaint with the FTC, the state’s attorney general’s office, 

and the Better Business Bureau. The FTC has brought numerous debt collection cases to address 

illegal practices, including those impacting military consumers (such as BAM Financial). And 

the FTC provides further information on dealing with debt collection on its website.

And deployments can put stress on servicemembers’ repayments as well. A military 

representative counseled that, before servicemembers deploy, it’s best to notify creditors in 

advance of deployment because they can place notations in the servicemember’s file and help 

deal with potential payment interruptions. Many creditors understand that it’s possible for 

servicemembers on deployment to have problems with making payments. And as an industry 

representative noted, problems with payments and collections can get worse if servicemembers 

and veterans don’t seek assistance when they are having trouble. It’s usually helpful to be 

proactive and seek assistance early.

Credit Decisions: Military consumers, like all consumers, seek access to credit to address 

both short-term and long-term needs. At our workshop, we looked at challenges and potential 

resources for military consumers facing credit decisions.

One challenge that military consumers face is that military life can be disruptive – involving 

frequent moves, deployments, and then transition to veteran status – which can put pressure on 

financial decisions. Servicemembers may be drawn to short-term loans, which, as discussed 

more below, are now subject to the Department of Defense’s amended military lending rule.

Panelists also brought up student loans as another example of an area in which servicemembers 

and veterans see challenges, which some consumers encounter after they use up their GI Bill 

benefits and need to find additional ways to pay for their education, such as through credit.

Military representatives emphasized that servicemembers and veterans should be aware of their 

wide range of options for loans, including banks, credit unions, military relief organizations, and 

others. As noted above, military counseling services are available to assist servicemembers with 

financial decision making in advance, which can include evaluating credit options, and to help 

deal with any problems that arise in obtaining credit or repayment, both during service and as 

they transition to civilian status. And military relief societies can provide short-term credit for 

emergencies and certain necessities for servicemembers and their families under certain 

circumstances. With these resources, servicemembers shouldn’t feel the need to make middle-ofthe-night credit decisions in a rush, which may result in decisions made without understanding 

all of the terms and obligations. Some veterans clinics and university law clinics provide support 

to veterans in the financial area, although the types of financial issues they address vary. Being 
A Closer Look At The Military Consumer Financial Workshop | Staff Perspective

4

aware of a wide range of available options can help military consumers – and their spouses or 

partners, who often manage finances during deployment – make informed financial choices.

Military consumers who have significant obligations should also watch out for deceptive offers 

of debt or credit relief. These kinds of scams often involve a large upfront fee, and months later, 

nothing positive has happened: the debt has not been paid off, and their credit scores have 

dropped. As military representatives from several branches observed, the FTC has been active in 

this area, halting many scams (for example, Strategic Student Solutions; and the recent “Game of 

Loans” sweep). The FTC also has helpful publications available to help military consumers and 

others cope with debt. And as one presenter noted, military consumers should be aware that 

military-themed advertising and emails or messages touting various offers may have no 

connection to the military at all, and may be seeking to obtain sensitive personal information.

Some also could be scams seeking military consumers’ funds (for example, Blue Saguaro 

Marketing and Advertising Strategies).

Legal Rights for Military Consumers: There are numerous rights that protect 

military consumers and their families in their financial decisions.

For example, the Military Lending Act (MLA) and DoD military lending rule provide significant 

protections for covered borrowers (servicemembers and dependents), as to most credit taken out 

during active duty. As military representatives noted at the workshop, creditors must cap the cost 

of credit at 36% annually; provide certain disclosures of credit terms; and avoid certain credit 

practices, including military allotments (amounts that servicemembers authorize to be paid 

directly and automatically to others from the servicemember’s salary), prepayment penalties, 

waivers of legal rights, and others. The MLA and DoD rule void contracts in violation of this 

law, establish a private right of action for servicemembers and dependents, and provide for 

potential administrative and criminal penalties against a creditor for violations. 

The Servicemembers Civil Relief Act (SCRA) also provides many protections for 

servicemembers who are deployed or on active duty (and sometimes dependents). For example, 

it limits interest charged on credit extended before service to 6% annually – forgiving any greater 

interest, not deferring it. It can also be used to stay several types of court proceedings. And 

SCRA establishes civil penalties for violations, as well as equitable relief and damages for 

injured persons. However, not all protections are automatic; some require servicemembers to 

notify the creditor (including to trigger the interest rate cap).

Military consumers can also submit complaints to various enforcement agencies, which may be 

able to halt unlawful practices. The FTC accepts complaints at ftc.gov/complaint and the 

Consumer Financial Protection Bureau accepts complaints at consumerfinance.gov/complaint, 

for example. The FTC reviews consumer complaints and can take action to halt deceptive or 

unfair practices under Section 5 of the FTC Act. The FTC also enforces many other statutes that 

can assist military consumers, such as the Truth in Lending Act (which includes certain lending 

disclosure requirements and consumer protections), the Electronic Fund Transfer Act (which 

includes a mandate for a signed authorization for preauthorized electronic fund transfers and a 

clear statement of terms), the Fair Debt Collection Practices Act (which includes a prohibition on 

debt collectors using abusive, unfair, or deceptive practices to collect from consumers), and the 
A Closer Look At The Military Consumer Financial Workshop | Staff Perspective

5

Fair Credit Reporting Act (which includes consumer protections related to the accuracy, fairness, 

and privacy of information in consumer reporting agency files).

Further, in addition to its work training servicemembers on financial literacy issues, the 

Consumer Financial Protection Bureau accepts and monitors complaints, including those from 

military consumers, and can bring enforcement actions. The U.S. Department of Justice can 

bring certain enforcement actions to help military consumers as well. And state authorities also 

may be able to offer assistance. For example, one panelist noted that the Texas State Securities 

Board can protect military consumers on the investment advice front, by requiring brokers to be 

registered and licensed, providing free background regulatory checks on any investment advisor, 

and assessing suspensions and fines if warranted.

Promoting Financial Literacy and Capability: Panelists emphasized that financial 

education early and often, adapted to the military life cycle, is crucial. As military consumer 

advocates noted, many new servicemembers may be away from home and earning substantial 

money for the first time, yet not have experience with significant financial decisions. Mid-career 

servicemembers may take on a lot of responsibility and debt – buying houses, saving money for 

kids’ college, and perhaps incurring medical or education debt. Veterans can face diverse 

financial issues when transitioning out of the service and beyond, including searching for a job in 

the civilian sector and challenges related to obtaining and repaying credit. Wounded 

servicemembers and veterans face particular challenges as they also deal with the recovery 

process. 

Panelists emphasized that financial outreach and education is important at all stages. Even senior 

officers should be encouraged to seek out personal financial managers or counselors, for their 

own benefit and as a model to encourage more junior servicemembers to seek assistance as well.

And veterans organizations can help those who have already left the military service. Panelists 

emphasized that different communication strategies may be needed for different generations, and 

that technology can be used to enhance the impact of financial education. To enhance military 

consumers’ financial decisionmaking, literacy training and experiential training with examples 

showing the results of financial choices may be helpful, and panelists who are involved in 

assisting military consumers report that they have used FTC materials to help improve financial 

literacy.

Panelists described how successful outreach, including working with the FTC on education 

initiatives, had included various approaches. One speaker emphasized the need to connect 

military families with consumer information as close as possible to when they’re making 

financial decisions. Another lesson learned is to encourage servicemembers – and their spouses –

to be familiar with trusted resources early on so that they have a toolbox of options ready when a 

crisis strikes or when a financial decision needs to be made. Those who provide consumer 

information to servicemembers must be aware of when financial pitfalls are more likely to occur 

– for instance, when buying a car, or making a move. Another speaker highlighted the 

importance of supporting wounded warriors with financial information, an aspect of recovery 

that might be overlooked. He stressed that having a financial goal can be part of the healing 

process and help change a client’s outlook to developing and being energized with a plan for the 

future.
A Closer Look At The Military Consumer Financial Workshop | Staff Perspective

6

Panelists also emphasized that it is important to encourage both servicemembers and veterans to 

report their credit problems so they can learn about available remedies and get prompt assistance.

This includes encouraging servicemembers and veterans to seek out counseling services and –

especially for veterans – to report needs in this area to veterans law clinics, regulators, and 

consumer protection agencies. Military consumers, like all consumers, also can check their credit 

report for free at annualcreditreport.com, and then address any problems promptly. 

Finally, a common theme for all levels was the importance of savings. Many military consumers, 

dealing with the demands of their military service, worry about not having a safety net. Having 

emergency funds through savings can help avoid unnecessary debt and deal with unexpected 

expenses. Participants emphasized that putting money away each week – even if only a small 

sum – can make a difference. One military counselor recommended that consumers have two 

pools of money, one for retirement savings and one for an emergency fund, and that consumers 

not touch the retirement money to address emergencies. And a military consumer advocate 

recommended that, whenever a servicemember gets a promotion, he or she should go to a 

personal financial manager or other military financial advisor for advice on how much of the 

increased salary to put into a savings plan.

Several speakers throughout the day referenced the FTC’s military consumer website, 

MilitaryConsumer.gov. The website is designed to help members of the military community 

navigate personal financial decisions in view of their unique challenges, such as frequent 

relocations and deployment. The site provides a wide array of material on financial issues and 

scams for the benefit of military consumers and is free and mobile-friendly. It includes quick tips 

on five financial categories: earn, spend, borrow, save and invest, and protect, along with a 

toolkit with talking points and slides. The FTC also uses social media regularly to transmit 

information for military consumers, and provides many other resources that can be easily 

accessed by military consumers, such as identitytheft.gov.
A Closer Look At The Military Consumer Financial Workshop | Staff Perspective

7

Conclusion

The FTC’s Military Consumer Financial Workshop illuminated many important financial issues 

for military consumers, and helped outline effective strategies to address them, including 

discussion of consumers’ rights and financial readiness strategies. We brought together a diverse 

group of stakeholders, and we hope this workshop helps to open a pathway to collaborative work 

on these important issues. The FTC is committed to consumer protection in this crucial area and 

looks forward to future initiatives to support military consumers’ financial readiness. More 

information about the workshop, including videos of the panels and presentations, can be found 

on our website at ftc.gov/militaryconsumerworkshop. And to file a complaint, visit 

ftc.gov/complaint.