Protecting those who protect the country: closing the loopholes in military lending act

The Department of Defense (DoD) wants to reinforce the Military Lending Act with additional protections for servicemembers, and the Consumer Financial Protection Bureau (CFPB) agrees that existing loopholes in the act should be closed up, according to a recent CFPB press release. The CFPB recently issued a report that highlights how these loopholes “are racking up costs for servicemembers,” explaining that “these gaps have allowed companies to offer high-cost loans to military families by skirting the 36 percent rate cap and other military-specific credit protections.” The DoD wants to broaden the scope of the act “to cover deposit advance products” as well as “more types of payday, auto title, and installment loans.” Currently, the Military Lending Act rules apply only to closed-end payday loans not exceeding $2,000 with terms of 91 days or fewer, closed-end tax refund anticipation loans, and closed-end auto title loans with terms of 181 days or fewer. The DoD proposes extending the rules to apply to “include credit offered or extended to active-duty military members that has a finance change or is payable under a written agreement in more than four installments” in order to cover more types of credit. For more, read the full release.

Consumer Financial Protection Bureau, Consumer Lending and Services, Depository Institutions, Federal Regulatory