Capital One SCRA Settlement: $12 Million, Six Kinds of Violation

What happened

The Justice Department alleged that Capital One N.A. and Capital One Bank (USA) N.A. violated the SCRA across an unusually wide range of conduct at once: improper denials of the 6 percent interest rate on credit cards and car loans, insufficient 6 percent benefits where the rate was granted, wrongful foreclosures, improper motor vehicle repossessions, and wrongful court judgments.

The proposed consent order was filed at the same time as the complaint. DOJ described it as one of the most comprehensive SCRA settlements ever obtained by a government agency or any private party under the statute. The order reached back to accounts dating to July 15, 2006.

One term is worth reading twice, because it is the fix for the trap that catches most servicemembers: the order required Capital One to treat a 6 percent request on one account as a request on every account it or its affiliates held. Before that, a servicemember who sent one letter about one card could still be paying full interest on everything else.

The law behind this: 50 U.S.C. § 3937

Maximum rate of interest on debts incurred before military service: read the statute.

Today’s action makes clear that the Justice Department will fight for our service members, and use every available tool, resource and authority to hold accountable those who engage in discriminatory practices targeting those who serve.

Who was covered

Servicemembers with qualifying pre-service Capital One obligations in the covered period, including those foreclosed on, those whose vehicles were repossessed, and those who requested the 6 percent cap and received too little or nothing.

What the settlement paid

• Approximately $12 million in total.
• About $7 million in damages, including at least $125,000 plus compensation for lost equity with interest to each servicemember whose home was unlawfully foreclosed on, and at least $10,000 plus lost equity with interest to each servicemember whose vehicle was unlawfully repossessed.
• A $5 million fund for servicemembers shorted on rate-cap benefits, with any remainder donated to servicemember charities. Independent audits could add further compensation.

Why this case matters

The one-request-covers-every-account term. Most rate-cap underpayment is not a refusal, it is a request that a lender applied to one account and quietly ignored for the rest.