Recent articles highlight problems facing our veterans when returning from active duty. Difficulties receiving health care from the veteran’s hospitals has been well documented, and the public exposure of the problem is leading to reforms in veteran’s health care, the least that we can do.
Health care is not their only problem. Despite laws requiring lenders to obtain court orders before seizing the vehicles of active duty service members, there are more and more reports of veterans’ vehicles and other products being repossessed while they serve their country. When veterans seek redress from the courts, often times the cases are dismissed because there is language in the lending agreement that states that any disputes pursuant to the lending agreement require that the parties resolve their dispute by mandatory arbitration, so the case is dismissed after being filed and the veteran is forced to arbitrate his case. The law challenged by mandatory arbitration clauses is the Service members Civil Relief Act, or S.C.R.A. Under the law, active duty military members and their families are protected from repossession and foreclosure without a court order. It allows them to terminate any real estate or auto lease when their military orders require them to do so. And it requires lenders to reduce the interest rates on any loans to 6 percent.
While arbitration seems like a reasonable alternative, normally these contracts work to the lending company’s advantage. Often the mandatory arbitration clause specifies a particular arbitration company hand chosen by the lender, and as a result, the outcomes are more often than not in favor of the company and are not made public. Additionally, the rules of evidence usually are not fully followed in an arbitration which allows the lending company to get into evidence documents that otherwise would not be admissible in a court of law. Arbitration may preclude the veteran from being able bring other actions for bad faith against the lender as well.
Many consumers understand the frustration with the mandatory arbitration clauses in many different lending agreements, and no one thinks it is to the consumer’s advantage to have the mandatory arbitration clauses as they limit consumers’ rights, but it is supposed to be different for veterans who are deployed abroad. Ironically, some of the same institutions who praise what they do for veterans and the sacrifices that veterans make for our country are the same institutions who use mandatory arbitration clauses and violate the federal protections afforded to our veterans. Allowing mandatory arbitration to trump the federal protections afforded veterans is equivalent to taking these rights away from veterans. Arbitration can be a very good way to resolve matters, but only if it is agreed upon at the time by both parties.
Last year, a bipartisan bill that would have allowed service members to opt out of arbitration and file a lawsuit met with opposition from well-known financial institutions. The bill never made it out of committee but hopefully will be reintroduced this year. Businesses are worried that if they make an exception for veterans, perhaps this will put them on the slippery slope of having to ban mandatory arbitration for all consumers.
It is time for lending companies to give more than just lip service to our veterans. Many returning veterans are scarred physically and mentally. Often they have losses of limbs or head injuries that preclude them from ever earning what they did prior to their active service. To come home to foreclosure of repossession is just added insult that we as citizens should fight to eliminate.
On this Saint Patrick’s Day, raise your glass for the Irish, and raise another for our veterans. They deserve our help and respect.
Sincerely,
Michael K. Gillis, Esq.
GILLIS & BIKOFSKY, P.C.
1150 Walnut Street
Newton, MA 02461
Phone: 617-244-4300
Fax: 617-964-0862
E-mail: mgillis@gillisandbikofsky.com