Washington, D.C. – In response to a new Department of Defense (DoD) proposal to crack down on payday and other high-cost lenders, 187 consumer, military and civil rights organizations sent a letter supporting DoD’s effort to address abusive lending practices that threaten Service members’ financial security.
The letter is available here: http://bit.ly/1wC8bUS
In 2007, DoD issued important rules under the Military Lending Act (MLA) to protect Service members and their dependents from abusive rates, unfair collection practices and the cycle of debt caused by payday lenders, auto title lenders and others. The 2007 rules capped interest rates at 36 percent and applied other key consumer protections to a narrow subset of abusive credit: payday loans with terms of 91 days or fewer and for an amount of $2,000 or less, vehicle title loans with terms of 181 days or less for any amount, and tax refund anticipation loans.
Shortly after the adoption of the 2007 rules, lenders began offering longer-term payday loans, auto title loans and triple digit interest rate lines of credit to evade the MLA protections.
Under the new proposal, credit products made to Service members and their dependents would be subject to a 36 percent interest and fee cap and other protections regardless of the amount or length of the loan.
Additional Materials:
CFA Policy Brief: Gaps in the Military Lending Act Leave Many Service Members Vulnerable to Abusive Lending Practices (July 2013).
CONTACT: Tom Feltner 202-618-0310
The Consumer Federation of America (CFA) is an association of non-profit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, more than 250 of these groups participate in the federation and govern it through their representatives on the organization’s Board of Directors.