Compliance Q&A: SCRA Procedure Considerations

Question:  Our current SCRA procedures say that the interest rate should be retroactively applied to the date on which the service member was called to military service. In the case of a member of the reserve, though, would that be the date that they received their orders?

Answer: For full-time, active duty service members, SCRA provisions generally begins on the day the member reports for military service. However, for members of the reserve, many SCRA provisions begin at an earlier date. The bank has to be careful about making this distinction because if not, it has the potential to result in SCRA violations for not correctly limiting the amount of interest charged for the entire applicable period. For reservists on federal active duty, the SCRA states that “[a] member of a reserve component who is ordered to report for military service is entitled to the rights and protections of this subchapter and subchapters II and III during the period beginning on the date of the member’s receipt of the order and ending on the date on which the member reports for military service.” See 50 U.S.C. § 3917(a): This means that members of the reserve receive many of the protections of the SCRA, including the rate limit, prior to the date that member reports for active duty. Once the member of the reserve component reports for military service, these limited benefits end and are replaced by the full benefits of the SCRA.