Is Citi Engaging in Criminal Abuses of Active Duty Servicemen on Their Student Loans?

Given all the varieties of bank-perpetrated mortgage fraud that have come to light in recent years, one that got comparatively little attention were abuses under the Servicemembers Civil Relief Act. SCRA shields active duty servicemen cannot be the target of civil until their tour of duty has been completed. That means, among other thing, bankruptcies, foreclosures and even divorces are put on hold. Recent amendments include capping the interest rate on most types of debt at 6%.

Despite the clear provisions of the law, mortgage services were found to be violating on a widespread basis, both by failing to reduce interest charges to 6% and on foreclosing on military personnel who were deployed. 6000 servicemembers were plaintiffs in a suit against one bank, JP Morgan. JP Morgan settled pronto recognizing that this was a potential PR disaster in the making. The Department of Justice launched an investigation (violations of the SCRA are criminal). But of course, no one was prosecuted. The DoJ included a settlement of the SCRA in its mortgage settlement earlier this year. And as Dave Dayen (who has been all over this story) wrote a couple of weeks ago, it appears that this settlement isn’t producing much in the way of restitution to harmed servicemen. Well played, banks!

I caught an item on Consumerist earlier this week which raises the question: are there other systematic SCRA violations that have yet to come to light? The Consumerist piece is about Benjamin, who is serving in Afghanistan. He obtained forbearance on his student loan when he received mailed Citi a copy of his orders, which specified that he would serve a minimum of two years. Now that two years are up, Citi has sent him letters demanding that he prove he is still in service.

This may sound reasonable, but it isn’t. As the soldier has tried explaining repeatedly, and Citi pretends not to get, orders are in effect until new orders are issued. As BankersOnline explains:

What is “Active Duty” Under the SCRA?
Typically we focus on customers who are members of the Army, Navy, Air Force, Marine Corps, or Coast Guard on active duty, and members of the National Guard called up to active duty for more than 30 consecutive days under Title 32 USC. Section 101 of the Servicemembers Civil Relief Act refers to Section 101(a)(5) of Title 10, United States Code (USC) to help define who qualifies for protection as a “servicemember.” ….

Protections for those serving under Section 101 of the SCRA, (the five services, the National Guard under Title 32, the Public Health Service Officers, and National Oceanic & Atmospheric Officers) begin on the date of entry into military service, ands ends on the date on which the servicemember is released or dies while in military service.

So while it might be acceptable for Citi to send a note saying, “Ahem, if you’ve been discharged and you don’t let us know, we’ll do all sorts of awful things to you.”

But it turns out Citi has absolutely no reason to be bothering soldiers on duty. Per Wikipedia:

Courts will generally require litigants to provide proof that an individual is not on active duty before adverse action is taken, i.e. foreclosures, garnishments, attachments, evictions, and judgments. It is important to note that the benefits conferred upon servicemembers extend after active duty. Verification of active military duty may be achieved on-line. If the individual’s social security number is unknown, the government site will not provide a response; however, there are a few commercial sites on the internet that are able to conduct the verification for a fee.

In the highly unlikely event that Citi doesn’t already have Benjamin’s social security number, I’m sure he’d be delighted to provide it to get off their back.

Benjamin has been dealing with Citi via e-mail and phone (and enlisting the help of folks state side) for over two months. This means the odds are good that his student loans is now being charged at its previous interest rate.

While this is clearly only one instance, big banks like Citi are not set up to do anything in a one-off manner. The dunning letter was auto-generated; the bank deemed his active duty to have ended (based on an inability to understand the word “minimum”); it pretends to be unaware of the fail-safe way to verify whether Benjamin is on duty, which is by checking with the active duty database. At Consumerist, one commentor described how Citi also regularly tells grad students who are in school that their loans are in repayment when the bank clearly knows they are in school, forcing them to play a “show me the documents” game. So it is not implausible that they are engaged in the same bad behavior with active duty servicemen, in clear violation of the law.

If so, I hope a class action attorney gets his hands on Citi and makes them pay, big time. It would be better if someone sent the executive who approved this dunning scheme to jail, but since the Obama Administration has decided that big bank employees never commit crimes, we’ll have to hope for costly and embarrassing litigation.

Print Friendly, PDF & Email


  1. skippy

    Don’t send to them* (*bright boy banksta elitists) to jail (unproductive), send them to the sandstans as cabana boys, effluent engineers, body bag fillers or better yet sniper detection drones.

    Skippy… in the latter case just whack them up with some of the local shite, some Viagra, don 3D headgear (pron viewing) and release into the wild… should at least improve moral… just saying… snort… indubitably.

  2. Peter Pinguid Society

    Is Citi engaging in criminal abuses of active duty servicemen on their student loans?

    No Citi bank executives are in jail, therefore according to the in-depth analysis of Naked Capitalism’s own Peripheral Visionary it follows that no crimes have been committed.

    Furthermore, if crimes had been committed you can bet Attorney General Holder would be on top of it, and NPR’s Adam Davidson, WaPo’s Ezra Klein, as well as the New York Times would not stop screaming about these abuses until the criminals were apprehended and sitting behind bars in orange jump suits.

    Also, if Robert Shiller heard that Citi was engaging in criminal abuses of servicemen, he would appear on Squawkbox denouncing Citi, then write articles about it until the criminal behavior stopped.

    The reason none of these things are happening is because no crimes have been committed.

    We are the Peter Pinguid Society, we are the 0.01 percent.

    1. Peter Pinguid Society

      “But henceforth who is to define crime? Who shall decide what is good and what is evil? All the traditional systems have placed ethics and values beyond man’s reach. Values did not belong to him; he belonged to them…we now know they are his and his alone…” – Jacques Monod

      Let me correct this quote: we now know that crime is defined as anything bad that happens to a member of the 0.01 percent. If something bad happens to a member of the 99.9 percent, we know that it’s not a crime.

      Therefore even if Citi is engaging in “abuses” of servicemen, this cannot be regarded as a crime, unless you know of an abused serviceman who also happens to be a member to the 0.01 percent.

      In that unlikely event, then please don’t hesitate to contact the Peter Pinguid Society, and we’ll launch an investigation immediately.

  3. LucyLulu

    Capital One just settled a suit last week brought by Asst AG Perez for $12 million under SCRA, for wrongful foreclosures, vehicle repossessions, and failing to reduce interest rates to 6%, dating back to 2006. All victims will be compensated for money lost plus damages of $125,000, $10,000, and $500 respectively. Capital One also claims it will voluntarily reduce interest rates to 4%.

  4. Paul Walker

    Tragic that defending terrorists gathers far more attention and skill of top lawyers and DOj/State AG’s than defending servicemembers and their families from financial terrorism. Nothing new there though.

    1. Klassy!

      And from the web site:
      Visitors to are able to access information categorized into three areas:

      — Careers: Citi’s current job opportunities, which include mentoring programs, flexible hiring processes, and accelerated promotion tracks.

      Manage Your Money: Citi’s financial capability programs as well as products and services specifically developed for military customers.

      — Community: Citi’s engagement, led by Citi Community Development, with leading VSOs and community organizations to advance key initiatives in areas like jobs, financial education and housing.

      See, they’re giving the service members an education!

  5. citalopram

    These special rates should be applicable to everyone, not just the long arm of the kleptocracy.

  6. Up the Ante

    I’m sure the Taliban and Quaida fellows have a hearty chuckle at the antics of their brethren, the banker-terrorists of America.

  7. Procopius

    As with the story about widewpread foreclosures on active duty service members, this story puzzles me. Unfortunately I haven’t had a chance to talk to any of the military members at JUSMAG in Bangkok, but it sounds to me like a widespread breakdown in the chain of command. At the time I retired, thirty years ago, each service had a section of their Judge Advocate General’s branch which provided legal assistance to all service members. If a soldier was having trouble his chain of command, starting with his first sergeant (I was Army) and company commander and going on up to the President, had a responsibility to guide him/her to solutions to the problem. If a soldier refused to solve the problem(s), there were ways to administratively discharge that person as being too undisciplined to serve. If Citibank is harrassing this guy, why isn’t his command taking care of him? Something is very strange here, but perhaps the services have changed a lot since I’ve been retired. One suggestion of that is the revelation that Special Forces have been willing to engage in torture, which was unthinkable when I was on active duty. But I really wonder where his chain of command is, and the idea that they are engaged in fighting a war is not an excuse.

    1. K Ackermann

      Procopius, thanks for posting and thanks for your service. You speculate that possibly the service is not the same anymore, possibly implying lower standards today. You may be on to something. There are a few clues to support your thinking…

      First, the original mission into Afghanistan was to get Bin Laden and stop Al Qaida where they set up shop. Well, Bin Laden is probably still dead, and here’s Petraeus 3 years ago mentioning to the press that Al Qaida is no longer in Afghanistan. It sounds like no one else in the chain of command got the memo.

      Appearently the reason for being there has shifted. We have a large army now occupying foreign soil assisting the DEA in drug interdiction, arresting the natives for possession of hashish. It’s a good thing too, since the DEA team leader went and got himself shot up.

      As the article states, drug money brings in $125 million for the Taliban, which appearently is enough to counter our $300 million… per day efforts. The Taliban’s weapons and training must be 500 times greater than ours.

      It seems maybe the generals aren’t looking out for the troops. What general would place so many soldiers in harm’s way for so little a prize?

  8. Mike S.

    lol, pitchforks and torches,
    bloodletting is the only cure.
    what’s that? “incitement?”

    LOL, Brandenburg v Ohio, piss off!

  9. Midwesterner

    I show these stories to my son and his friends when they occasionally talk about enlisting.

    This far, I have been able to convince them that not only will they be used as tools for Corpgov, the actual government will do nothing to enforce the laws put in place to protect them from corporations.

    Thanks for yet another example and discussion of how US servicemen and servicewomen are treated like disposable commodities.

    1. Walter Wit Man

      If I am in this position to talk to young mn about enlisting I will probably remind them that they will be more likely to die by shooting themselves in the head then they are to die ‘heroically’ in battle. Many will suffer PTSD. I would ask them to think about why this is the case.

      Then I will suggest that these soldiers are not traumatized from being shot at by the enemy or seeing their buddies die, but at the thought of killing some poor defenseless child or civilian. I bet realizing they are being mindlessly treated as “heroes” for doing horrible things to innocent people is jarring and upsetting. We’ve been lied to about how good our country is that it must really be mind-blowing (no pun intended) to figure out that the truth is completely reversed and YOU are the terrorist colonial invader. I guess that advice is for the kids with war lust.

      For the kids that see enlisting as pragmatic and plan on non-combat roles, yeah, getting screwed over monetarily is bad. Unfortunately, this is about the only place to get a good job and about the only jobs programs in this country are for vets. And even though service members are getting screwed over by banks they actually get treated better than civilians in many ways (like not paying ATM fees, etc.).

  10. Janet Innes-Kirkwood

    “At Consumerist, one commentor described how Citi also regularly tells grad students who are in school that their loans are in repayment when the bank clearly knows they are in school, forcing them to play a “show me the documents” game.” I know this one. My undergrad loan bank was B of A I think the banks are padding their default numbers and getting extra interest because you get into forbearance while fussing with documents and interest accrues. I think when the bail out comes for the student loans they want the number as high as possible, or if the student pays it off or has it paid off by a program. It is a mathematical formula. Make the clearinghouse have to have all schools that give loan money and have those schools mandated to upload info to the clearinghouse. How about out the Gov. does the work. Don’t pay the banks that are in violation and fine the schools. Also go back retroactively and adjust the interests so people or the government does not pay for the scam. Make the loan holders write that computer program so that not one extra cent is owed them. The banks got a lot of money for less than nothing. Then look to see if this was a conspiracy. I bet it was. Another thing by the Banksters to drag a little person down. However with all this education that we all bought we can now do the math and read the writing on the wall. That might be the best return on the investment.

    1. job for all

      I am very much pleased with the contents you have mentioned. I enjoyed every little bit part of it.
      It contains truly information. I want to thank you for this informative read;
      I really appreciate sharing this great.

Comments are closed.