Ensuring Servicemembers' Protection Against Unlawful Financial Practices

The Servicemembers Civil Relief Act, enacted by Congress, aims to safeguard servicemembers' ability to dedicate themselves to national defense by granting them crucial protections. Among its significant provisions are reduced interest rates on specific loans and shielding against foreclosure while actively serving the nation.

In an ongoing legal matter, Citibank faces a lawsuit filed by servicemembers, representing themselves and others similarly situated, alleging violations of the Servicemembers Civil Relief Act. Four servicemembers claim that Citibank overcharged them and numerous active-duty servicemembers on credit card interest during their military tenure. Rather than addressing the substance of the servicemembers' allegations, Citibank contests their right to litigate by arguing that their credit card agreements mandate arbitration of class claims. Despite a federal judge's ruling last year affirming the servicemembers' entitlement to pursue class claims in court, Citibank is appealing this decision. Moreover, a coalition of businesses, led by the Chamber of Commerce, American Bankers Association, and American Financial Services Association, supports Citibank against the servicemembers' claims of unlawful conduct while serving their country.

Recently, the Department of Justice (DOJ) intervened in the case by filing a brief to uphold servicemembers' ability to safeguard against practices violating the Servicemembers Civil Relief Act. The brief asserts the correctness of the judge's ruling: servicemembers are explicitly empowered by the Act to bring lawsuits in federal court as a class to challenge financial institutions' violations, irrespective of any prior arbitration agreements. Congress intended for financial institutions like Citibank to face servicemembers collectively in court for alleged breaches of a law aimed at enabling their uninterrupted service to the nation.

The case, known as Espin v. Citibank, N.A., is currently before the Fourth Circuit Court of Appeals.