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Rising threats from debt collectors against members of the U.S. armed forces are undermining national security, according to data from the Consumer Financial Protection Bureau (CFPB), a federal watchdog that protects consumer rights. Debt collection complaints by U.S. military service members increased 24% last quarter, and attempts to collect on “debts not owed” surged 40%. Complaints by service members against debt collectors for deceptive practices ballooned from 1,360 in the fourth quarter of 2023 to 1,833 in the first quarter of 2024. To better understand the rising trend of debt collection complaints, we calculated the increase in the total number of complaints and the percentage increase quarter-over-quarter by U.S. state.
But debt collectors are gaining ground. Last quarter, debt collection complaints by U.S. military service members increased 24%, and attempts to collect on “debts not owed” surged 40%. Complaints by service members against debt collectors for deceptive practices ballooned from 1,360 in the fourth quarter of 2023 to 1,833 in the first quarter of 2024.
“There’s a connection between the financial readiness and the readiness of a service member to perform their duty,” said Jim Rice, Assistant Director, Office of Servicemember Affairs at the Consumer Financial Protection Bureau. Laws exist to protect the mission readiness of U.S. troops from being compromised by threats and intimidation, but debt collectors appear to be violating them at an alarming pace.
“If they’re threatening to call your commander or get your security clearance revoked, that’s illegal,” says Deborah Olvera, financial readiness manager at Wounded Warriors Project, and a military spouse who’s been harassed herself by a collection agency that tried to extort money from her for a debt she didn’t owe. But after she requested the name of the original creditor, she never heard from them again.
“The financial well-being of service members and their families is one of the Department’s top priorities.” —Andrew Cohen, Director of Financial Readiness at the Pentagon
Under the Fair Debt Collection Practices Act, it’s illegal for debt collectors to threaten to contact your boss or have you arrested because it violates your financial privacy. The FDCPA also prohibits debt collectors from making false, deceptive, or misleading representations in connection with the collection of a debt, even for borrowers with bad credit scores.
But according to the data, debt collectors are increasingly ignoring those rules. “Debt collection continues to be one of the top consumer complaint categories,” said a spokesperson at the Federal Trade Commission. The commission released a report earlier this year revealing that consumers were scammed $10 billion in 2023, a new benchmark for fraud losses.
In his book Debt: The First 5,000 Years, David Graeber argues that debt often creates a relationship that can feel more oppressive than systems of hierarchy, like slavery or caste systems because it starts by presuming equality between the debtor and the creditor.
When the debtor falls into arrears, that equality is then destroyed. This sense of betrayal and the subsequent imbalance of power leads to widespread resentment toward lenders.
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