Washington, D.C. – Today, the Consumer Federation of America and organizations representing servicemembers and their families issued an information request to the federal financial regulators tasked with enforcing the Military Lending Act (MLA). The request asks for details on the actions they have taken to protect active-duty servicemembers and their families from predatory lending conduct banned by the MLA.
“Our request for information will help determine whether our regulators have committed to enforcing the MLA on behalf of military families,” said Michael Best, Director of Advocacy Outreach at the Consumer Federation of America.
The information request seeks specific information on bad practices the agencies have uncovered and complaints filed in court against financial companies. The information request is available here.
Military Lending Act
In a report ordered by Congress, the Department of Defense wrote that “predatory lending undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all-volunteer fighting force.” On October 1, 2007, the bipartisan Military Lending Act took effect.
The MLA generally set an interest rate cap of 36% for certain types of credit products. It also provided other special protections to servicemembers and their families, such as forbidding financial companies from forcing borrowers into arbitration proceedings when they have disputes.
CFA and other consumer and military family advocates raised concerns that predatory lenders were sidestepping the intent of the Military Lending Act. In 2015, the Secretary of Defense updated MLA guidelines to include additional categories of loans.
Financial industry lobbyists recently urged the Department of Defense to delay the implementation of the rules applying to credit cards, but the Department denied their request.
Ascertaining Commitment
The 2013 Defense Authorization Act assigned the responsibility for enforcing the Military Lending Act to a broad set of agencies. The Federal Reserve Board of Governors, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Federal Trade Commission, the National Credit Union Administration, and the Consumer Financial Protection Bureau each play critical roles in enforcing the Military Lending Act.
Responses to today’s request for information will help to ascertain each agency’s commitment to enforcing this critical law.
Military families interested in learning more about their rights under the Military Lending Act can visit the CFPB’s website here.
Contact: Michael Best, (202) 939-1009