If you manage loans, rental properties, or any financial product that touches consumers, the Servicemembers Civil Relief Act (SCRA) should be near the top of your compliance agenda.
SCRA enforcement isn’t slowing down. It’s accelerating. and it’s bipartisan. For a full overview of what the law requires, see our complete SCRA compliance guide.
$400 Million and Counting
Since 2011, federal agencies have obtained over $400 million in monetary relief and penalties for servicemembers through SCRA enforcement actions. That number keeps growing.
The first Trump administration initiated 24 SCRA enforcement actions. The Biden administration initiated 27. And in April 2025, the current CFPB explicitly listed servicemember protections among its top 11 enforcement priorities.
This isn’t a partisan issue. Both sides of the aisle agree: servicemembers deserve protection, and institutions that fail to provide it will pay.
Recent Cases Show No One Is Exempt
Here’s a sampling of enforcement actions from the last 18 months:
Morningstar Properties, LLC (September 2024). Auctioned servicemembers’ property without obtaining required court orders. Penalty: $90,000 to affected servicemembers plus $40,000 in civil fines ($130,000 total).
Goines Towing & Recovery (February 2024). Auctioned servicemember vehicles without filing proper military affidavits. Penalty: $66,805 to servicemembers plus $30,000 civil penalty.
RedSail Property Management (January 2024). Refused to honor a servicemember’s lease termination rights and assessed improper charges. Penalty: $10,226 to the servicemember plus $3,000 civil penalty.
FPI Management, Inc. (June 2023). Required servicemembers to repay lease incentives upon exercising SCRA lease termination. Penalty: $51,587 to servicemembers plus $22,500 civil penalty.
JAG Management Company (October 2023). Demanded rent repayment from servicemembers exercising their right to terminate leases. Penalty: $41,582 to servicemembers plus $20,000 civil penalty.
Notice the pattern: these aren’t massive banks getting slapped with token fines. These are property management companies and small businesses. the kind of organizations that often assume SCRA enforcement won’t reach them.
The December 2024 Joint Letter
On December 5, 2024, the DOJ and CFPB took the unusual step of issuing a joint letter to financial institutions reminding them of their SCRA obligations. specifically the 6% interest rate cap on pre-service debts.
When two federal agencies co-sign a reminder letter, it’s not a suggestion. It’s a signal that enforcement is coming.
The letter specifically called out institutions that fail to:
- Proactively identify servicemembers in their portfolios
- Properly reduce interest rates to 6% on pre-service obligations
- Forgive excess interest rather than deferring it
Why Manual Compliance Fails
Most institutions still handle SCRA compliance through manual DMDC lookups. checking one borrower or tenant at a time against the Department of Defense’s database. This approach has three critical flaws:
1. It misses people. The CFPB found that fewer than 10% of eligible auto loans for activated Guard and Reserve members received the required interest rate reduction (CFPB, Protecting Those Who Protect Us, Dec 2022). Manual processes miss servicemembers due to name variations (maiden vs. married), data entry errors, and incomplete records. Each missed servicemember is a potential $79,380 fine.
2. It’s a point-in-time check, not ongoing monitoring. Reserve and National Guard members cycle in and out of active duty. A borrower who wasn’t on active duty at origination may be activated next month. One-time checks at origination don’t satisfy SCRA requirements for ongoing compliance.
3. It doesn’t scale. For a portfolio of 50,000 accounts, manual verification is simply not feasible at the frequency regulators expect. And the documentation burden. maintaining audit trails of every check, every action, every notification. compounds the problem.
The Real Cost of Non-Compliance
The fines are just the beginning. Here’s what SCRA violations actually cost:
- Civil penalties: $79,380 for a first offense, $158,761 for subsequent violations (July 2025 inflation-adjusted)
- Servicemember damages: In foreclosure cases, courts have awarded a minimum of $116,785 per affected servicemember. with no cap
- Class action exposure: Major institutions have paid tens of millions in SCRA class-action settlements
- Regulatory scrutiny: An SCRA violation often triggers broader compliance audits, consuming months of staff time
- Reputational damage: “Company penalized for violating military protections” is not a headline any institution wants
Compare that to the cost of compliance: either hire dedicated staff ($180,000–$240,000/year) or automate the process.
What Compliance Officers Should Do Now
1. Audit your current process. How are you verifying military status today? Is it manual, automated, or somewhere in between? How often do you re-verify?
2. Check your coverage. SCRA compliance isn’t just about mortgages. It applies to auto loans, credit cards, student loans, leases, storage liens, and more. Make sure every product line is covered.
3. Review your documentation. Can you produce a complete audit trail of every military status verification and every compliance action taken? Regulators will ask.
4. Consider automation. The math is straightforward: automated SCRA verification costs a fraction of dedicated compliance headcount, catches more servicemembers, and produces the audit trail regulators expect.
5. Don’t assume you’re too small. The 2024 enforcement actions targeted small property managers and towing companies, not just large banks. If you have customers who might be servicemembers, you have SCRA obligations.
See also: CFPB Scales Back, But SCRA Enforcement Intensifies. the DOJ’s new enforcement branch, state AG actions, and why the CFPB budget cut doesn’t mean less risk.
Browse the complete SCRA Enforcement Actions Database →
$400 million+ in SCRA settlements and penalties. Every one started with a process gap that could have been caught. How confident are you in yours?
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