WASHINGTON, D.C. — U.S. Senator John Thune (R-SD), Ranking Member of the Senate Committee on Commerce, Science, and Transportation, delivered the following prepared remarks at today’s “Soldiers As Consumers: Predatory and Unfair Business Practices Harming the Military Community” full committee hearing:

Thank you, Mr. Chairman, for holding this hearing to examine unfair financial practices that may be harming our military community, something I am sure all of the members of this committee care about. Thank you also to the witnesses for coming here to testify.

South Dakota is home to Ellsworth Air Force Base, where more than 9,000 military personnel, family members, and civilian employees are stationed. In addition, 4,250 Air Guard and Army Guard members serve in my home state. 

I am proud of their courage and grateful for their sacrifice and service to our country. I certainly do not want to see them or their families subjected to unfair financial practices.

This hearing will highlight the types of unfair practices and financial fraud that may be targeting our military men and women, the education and assistance programs available, and the law enforcement efforts undertaken to eliminate the worst practices and scams.  

Servicemembers, like all consumers, are not immune to the problems encountered by taking on too much debt. However, the unique demands of military service may exacerbate the negative consequences from too much debt. 

For servicemembers, unlike ordinary consumers, failing to pay any kind of debt is considered an offense under the Uniform Code of Military Justice, which could lead to a loss of a security clearance, or even result in an administrative discharge.

Admiral Mike Mullen, then Chief of Naval Operations, was quoted voicing strong concerns about these issues in a June 2006 article of Sea Power, stating that “A sailor’s financial readiness directly impacts unit readiness and the navy’s ability to accomplish its mission.” As mentioned in the article, financial difficulties were the number-one reason sailors were losing their security clearance and this was affecting the availability of servicemembers for overseas deployments. 

Due to the efforts of Senators Jim Talent and Bill Nelson, Congress took notice of those challenges and enacted the Military Lending Act in 2006, which was an important step in protecting against predatory lenders. While that law has largely been a success, the Department of Defense is currently considering whether its rule implementing the Military Lending Act needs to be updated.

The Department of Defense takes the issue of financial readiness seriously. I appreciate that the Department has made great strides to enhance its education, training and counseling, by beginning financial training right from the start– during Basic Training – and continuing throughout the servicemember’s career. 

As the issue of whether further solutions are warranted is examined, it is important to ensure there is a proper balance with access to appropriate credit, while also protecting servicemembers from unfair practices and outright fraud. 

I hope we can use this hearing today to highlight the financial assistance and education efforts that are available to servicemembers to make informed decisions and to protect against fraud. For instance, the military has legal assistance offices that offer financial education and counseling. I look forward to hearing from Captain Alexander, who serves in the Navy’s Mid-Atlantic Regional Legal Services Office, about his role in supporting and advising servicemembers when they fall victim to financial fraud.

I also look forward to learning more about the consumer protection initiatives from the Federal Trade Commission and the Consumer Financial Protection Bureau. We are privileged to have Mrs. Holly Petraeus here today to tell us of her efforts with the Office of Servicemember Affairs at the CFPB. I know that she has visited personally with the servicemembers stationed at Ellsworth, as well as dozens of other military installations. 

I would also like to call attention to Military Consumer Protection Day, which was held for the first time this past July. Its website, www.military.ncpw.gov, provides education and resources to servicemembers and their families to protect them against fraud.

In closing, we can all agree that financial readiness is an important issue for our military and our national security and that these brave men and women that protect us all over the world should not be victims of unfair practices at home.

Thank you again Mr. Chairman for holding this hearing and I look forward to hearing the witnesses’ testimony and what certain states are doing to rein-in unscrupulous practices.

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