What is the consequence if a credit union does not properly address a servicemember's request for rate reduction?

When a credit union does not properly address a servicemember's request for rate reduction, the credit union may face legal action for non-compliance. This is particularly relevant under the Servicemembers Civil Relief Act (SCRA), which offers certain protections to active-duty military members, including the right to request interest rate reductions on loans. Failure to comply with SCRA provisions can lead to legal consequences, including lawsuits or penalties.

Legal action can be initiated by the servicemember, or the credit union may be investigated by regulatory bodies for violation of the law. This highlights the importance of credit unions being aware of and adhering to regulations that protect servicemembers. Properly addressing such requests is not just a matter of customer service; it's a legal obligation that, if unmet, can result in significant repercussions for the credit union.

In contrast, the other options reflect misunderstandings about the protections and processes involved. For example, appealing to the NCUA is not typically a direct course of action available to a servicemember in this context. Charging additional fees would be contrary to the protections offered by the SCRA, and automatic approval of any rate increase is not a requirement of the law, making these options less relevant in this scenario.