The Consumer Financial Protection Bureau (CFPB) is stepping in and stopping the Fort Knox National Company from charging servicemembers hidden fees that amounted to millions of dollars.

The Military Assistance Company, a subsidiary of Fort Knox National, is a payment processing company that issues military allotments. The CFPB says they did not disclose recurring fees to their members, which could add up to $100-plus per year.

The settlement agreement between the CFPB and Fort Knox/Military Assistance states that the payment processor will pay more than $3 million in relief to servicemembers who were directly affected by the fees.

“Fort Knox National Company and Military Assistance Company enrolled servicemembers without adequately disclosing their fees, and then charged servicemembers without telling them,” said Richard Cordray, director of the CFPB. “As a result, servicemembers paid millions of dollars in fees, probably without even knowing it. Today we are taking action and others should take note.”

Military allotments not as common today

Fort Knox National Company, based in Kentucky, was one of the biggest third-party processors of military allotments in the country. A military allotment lets service members withdraw money from their earnings. This allows them to send money to their families, pay creditors, and have more financial flexibility.

The allotment system was put in place before automatic payments and electronic transfers were commonplace. Now, many creditors, such as banks, car lenders, retail stores and credit cards let service members set up automatic payments and have the money directly withdrawn from their wages. This makes allotments obsolete for many military families.

Service members paid monthly fees

The Military Assistance Company (MAC) charged service members between $3 and $5 a month as a flat fee, or service charge. In exchange for this fee, MAC made monthly payments to creditors. Even when the debt was paid off, service members were not always notified that MAC no longer needed to make payments to the creditor. This extra balance might exist outside the service member’s knowledge, with automatic payments coming out for a debt that has been paid off.

The CFPB states that for four years (from 2010 to 2014) MAC charged recurring fees against these residual balances. Money slowly disappeared from these accounts, which service members often did not even know about.

Because of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is able to take action against any financial operation that engages in unfair, deceptive, or abusive practices.