Amid a furor of criticism, the Pentagon announced on Wednesday that it would suspend efforts to force thousands of California National Guard soldiers to pay back enlistment bonuses and other incentives that were improperly given during the wars in Iraq and Afghanistan.
"There is no more important responsibility for the Department of Defense than keeping faith with our people," Secretary of Defense Ashton B. Carter said in a statement on Wednesday. "That means treating them fairly and equitably, honoring their service and sacrifice, and keeping our word."
Nearly all of the soldiers took the bonuses in good faith and were unaware of the misspending until notices arrived in the mail years later.
Some had to repay more than $20,000 and a few more than $40,000. Many had wages garnished and racked up penalties and other debt trying to pay back the bonuses.
A report on their hardships in the Los Angeles Times over the weekend provoked broad criticism from top lawmakers and major veterans groups.
"It is unthinkable to me that the Department of Defense's first reaction is to punish service members who fulfilled their end of the deal," Brian Duffy, the national commander of the 1.7-million-member Veterans of Foreign Wars, said in a statement. "This is how you destroy all faith in a Pentagon that is supposed to have your back."
Mr. Carter said Wednesday that he had ordered his department "as soon as practicable" to temporarily cease all efforts to collect on the debts. The Pentagon plans to set up a finance team by January to review cases. The team would offer "a streamlined, centralized process that ensures the fair and equitable treatment of our service members and the rapid resolution of these cases," Mr. Carter said.
"Ultimately, we will provide for a process that puts as little burden as possible on any soldier who received an improper payment through no fault of his or her own," Mr. Carter added. "At the same time, it will respect our important obligation to the taxpayer."
The National Guard initially said nearly 10,000 soldiers were affected, but the Pentagon said Wednesday that the number was closer to 2,000.
The botched bonuses stem from the 2000s, when the military was under pressure to meet recruiting goals. During that time, the California Guard sent troops through an assembly-line-style re-enlistment process at mass meetings, where bonuses were approved in minutes. The re-enlistments were overseen by a master sergeant, Toni L. Jaffe, who lavished troops with bonuses and forgiveness of student loans. She pleaded guilty in 2012 to approving more than $15 million in fraudulent claims.
Audits prompted by the criminal case turned up thousands of soldiers who had improperly received cash incentives. But many of the cases were technicalities, such as a sergeant who had received a bonus for re-enlisting as a biomedical repair specialist, but was then involuntarily deployed as a supply specialist and was stuck repaying a $10,000 bonus.
Guard members began receiving collection notices in 2012. Some refused to pay. Some sued. Still others were pushed into financial distress by payment notices demanding more than $1,000 a month, and racked up late fees and interest.
In 2014, the National Guard asked Congress to pass a law forgiving some of the debt, but Congress balked at the cost. Since the Los Angeles Times article was published, however, top lawmakers have lined up to demand a fix.
Representative Duncan Hunter, Republican of California, who served in the Marine Corps in Iraq and Afghanistan, called the repayment policy "disgraceful and insulting."
In a letter to Mr. Carter, he added, "I ask that you utilize your authority to influence a solution, including a possible legislative fix if determined necessary, that's in the best interest of the individuals and families impacted."
Major veterans groups demanded that the Pentagon not only stop collecting on the bonuses, but also reimburse what soldiers had repaid.
"It is unthinkable that these brave Americans who stepped forward when others did not after the 9/11 attacks are being left high and dry by their leadership," said Paul Rieckhoff, the chief executive of Iraq and Afghanistan Veterans of America. "The fact that our government would ask for it to be repaid with interest is simply unacceptable."
