DoD Proposes More Lending and Credit Protections for Service Members
By Capt Ryan Fisher, 366th Fighter Wing Legal Office
/ Published October 30, 2014
MOUNTAIN HOME AIR FORCE BASE, Idaho --
On Sept. 29, the Department of Defense proposed broader protections for service members from predatory lenders. The proposed rules aim to close loopholes in current regulations allowing predatory lenders to take advantage of service members.
The proposal is primarily aimed at supplementing DoD's current regulation implementing the Military Lending Act (MLA), passed in 2006. Initially, Congress allowed DoD to determine which lenders the MLA would apply to, but in recent years, DoD learned the breadth of the regulation left some service members without the protections originally intended by the MLA.
One example of the proposed changes is to broaden the types of loans the MLA would apply. Currently, payday loans to military members are capped at 36 percent annual interest rate, but this protection only applies to "closed-end" loans with a term of less than 91 days and for less than $2,000. Loans outside of these terms are not protected. The proposed changes would cover both "open-ended" and "closed-end" loans, including loans from credit card companies and loans secured by car titles. Prior to this proposal, the MLA did not cover credit card lending, which amounts to a significant portion of the debt held by military members.
The new proposal will require lenders to provide customer's information about financial counseling services and alternative borrowing options with lower interest rates.
If you would like to learn more about the proposal, it is published on the Federal Register and is open for public comment. The full proposal can be found at: www.federalregister.gov/articles/2014/09/29/2014-22900/limitations-on-terms-of-consumer-credit-extended-to-service-members-and-dependents
. The comment period closes on Nov. 28, 2014.
If you have any questions about the Military Lending Act, or have other legal needs, please call the Legal Office at 828-2238. Appointments are available from 9 a.m. to 4 p.m. on Tuesdays, and walk-in assistance is available Wednesdays from 8 to 9 a.m. for active-duty members and from 2 to 3 p.m. for all eligible clients.