Banking

Suit claims BofA charged excessive interest to military members

A federal lawsuit claims Bank of America charged excessive interest to U.S. military members on active duty.
A federal lawsuit claims Bank of America charged excessive interest to U.S. military members on active duty. Getty Images

A federal lawsuit claims Bank of America charged excessive interest to U.S. military members on active duty.

The class-action suit, filed Monday in U.S. District Court in Raleigh, came just days after the Charlotte-based lender agreed to a $30 million fine to settle similar charges brought by the Office of the Comptroller of Currency.

The plaintiffs – three male veterans and their spouses, including a couple from Raleigh – claim that Bank of America violated the Servicemembers Civil Relief Act, which is intended to cap interest payments on debt for military members at 6 percent while on active duty. All interest above that during active duty must be forgiven.

According to the suit, Bank of America didn’t do that. It claims, among other allegations, that the bank charged an illegally high rate of interest even after it was notified of the plaintiffs’ active-duty status.

The bank had not filed a formal response to the suit as of Thursday. When last week’s settlement over debt-collection practices affecting military members was announced, the bank said it had already begun modifying its practices.

“We honor the service of our armed forces and are committed to serving them as well as they serve us. After industry-wide shortfalls were identified several years ago, we put in place leading capabilities and a dedicated team available around the clock to service members throughout the world. We will continue to do all we can to meet the unique needs of our military customers,” said Lawrence Grayson, Bank of America spokesman.

The veterans and their spouses are asking for $5 million. All six people suing had outstanding credit-card and other debt with the lender when the three servicemen were deployed in Iraq between 2005 and 2009, court documents say.

The $30 million settlement announced last week isn’t the first time the bank has been accused of wrongdoing against veterans. In 2013, Bank of America agreed to pay $36.8 million to military service members it was accused of illegally foreclosing upon between 2006 and 2010.

Regulators and the Justice Department have reached settlements with other banks over alleged violations of the Servicemembers Civil Relief Act. In February, the Justice Department announced settlements with five of the nation’s largest mortgage servicers, including Ally Financial, Bank of America and Wells Fargo. Staff writer Deon Roberts contributed.

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