Pre-collection verification at scale

Yes. The SCRA applies to all creditors, including third-party debt collectors and debt buyers. Under §3931, you must verify military status via DMDC before filing for default judgment. Under §3937, the 6% rate cap applies to pre-service debts during active duty. Violations result in DOJ enforcement and consent decrees.

Use the Defense Manpower Data Center (DMDC) database via the SCRA website or batch upload API. Verify military status before filing for default judgment, garnishment, or any legal action. Civrel automates DMDC verification and provides audit trails for compliance documentation.

Under §3937, interest rates on obligations incurred before military service must be capped at 6% during active duty. This applies to credit card debt, personal loans, and other consumer debts. The servicemember must provide written notice and a copy of military orders. You must refund or credit any excess interest charged.

Only with proper SCRA compliance. Under §3931, you must file an affidavit of military status stating whether the defendant is in military service. If the defendant is on active duty, the court may stay proceedings for at least 90 days. Filing a false affidavit is a federal crime punishable by up to $100,000 fine and 1 year imprisonment.

Penalties include: (1) DOJ enforcement actions and consent decrees, (2) Judgment set aside if filed without proper affidavit, (3) Customer remediation (refunds and account corrections), (4) Criminal penalties for false affidavits (up to $100,000 and 1 year), (5) Reputational damage and loss of clients.

Best practice: (1) Before any legal action (default judgment, garnishment, lawsuit), (2) Quarterly portfolio screening to identify newly activated servicemembers, (3) Upon receiving notice from servicemember. Proactive screening prevents violations before they occur.

The 6% rate cap under §3937 still applies if the debt was incurred before military service began, even if activation occurred after the debt. The key date is when the obligation was incurred, not when collection began. Default judgment protection under §3931 applies during active duty regardless of when the debt originated.