Watchdog agency’s closure could lead to more military financial scams

Democratic lawmakers and advocacy groups are warning veterans and military families to be wary of new financial scams targeting their communities amid the White House’s move to shut down the Consumer Financial Protection Board.

The CFPB was founded in 2011 to serve as an independent bureau within the Federal Reserve, to ensure that financial products and services offered to Americans are fair and transparent. It fielded nearly 100,000 consumer complaints every month in 2024 from service members, veterans and their families, according to the agency’s web site.

The cases included credit reporting issues related to military moves, unfair mortgage practices involving VA home loans and financial scams specifically aimed at military members with limited financial education. Internal estimates said the agency helped return more than $175 million to veterans and military dependents in recent years.

But last week, in a purported cost-cutting move, the White House — and billionaire Elon Musk — moved to close the agency. Acting CFPB director Russell Vought said the office had become “woke and weaponized” and was no longer needed.

Sen. Tammy Duckworth, D-Ill., told Military Times she strongly disagrees with the decision.

“Getting rid of the CFPB actually will lead to more waste, more fraud and more abuse,” Duckworth said. “We all know about companies targeting military families, the auto loans and the 20% interest rates, mortgage fraud, the payday lenders, the student loan frauds.

“We really need to educate our military men and women on what is out there, to really be more aware now of these tactics and not fall for them.”

In a speech on the House floor Wednesday, Democratic Party Whip Katherine Clark, D-Mass., echoed those same concerns.

“The American people did not vote for more scams, for more corporate greed,” Clark said. “They didn’t vote to have our service members go into more debt. They voted for people to fight for them, for lower costs, for their part in the American Dream.”

Advocacy groups have sued to prevent the closure of the board, although the timeline for a decision on the issue remains unclear. They have argued that financial scams are particularly problematic for military families, since debts can affect individuals’ security clearance status and ultimately undermine readiness.

White House officials have argued that the CFPB work can be picked up by other agencies, and that the federal government remains too overstaffed and unsustainable.

Meanwhile, Duckworth is calling for military charities to step up their work identifying and preventing fraud in the community.

“Since [the CFPB] started, there’s a whole new generation of recruits going through basic training who have never faced these problems without help,” Duckworth said. “And so financial literacy, I think, is going to have to be something that is re-injected back into the training we provide, especially for our youngest servicemen and women.”