{"id":36292,"date":"2023-03-07T03:38:56","date_gmt":"2023-03-07T08:38:56","guid":{"rendered":"https:\/\/d56fg8tfg.fitnews.club\/finance\/cfpb-report-finds-loopholes-in-military-lending-act-rules-rack-up-costs-for-servicemembers\/"},"modified":"2023-03-07T03:38:56","modified_gmt":"2023-03-07T08:38:56","slug":"cfpb-report-finds-loopholes-in-military-lending-act-rules-rack-up-costs-for-servicemembers","status":"publish","type":"post","link":"https:\/\/d56fg8tfg.fitnews.club\/finance\/cfpb-report-finds-loopholes-in-military-lending-act-rules-rack-up-costs-for-servicemembers\/","title":{"rendered":"CFPB Report Finds Loopholes In Military Lending Act Rules Rack Up Costs For Servicemembers"},"content":{"rendered":"
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CFPB Backs Department of Defense Proposal to Broaden the Rules for Greater Protections<\/strong><\/em><\/p>\n

WASHINGTON, D.C. \u2013 <\/strong>Today the Consumer Financial Protection Bureau (CFPB) issued a report highlighting how loopholes in the current Military Lending Act rules are racking up costs for servicemembers. According to the report, 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 Bureau included these findings in a comment filed in support of the Department of Defense\u2019s proposal to broaden the scope of the Military Lending Act rules to cover deposit advance products, and more types of payday, auto title, and installment loans.<\/p>\n

\u201cThe current rules under the Military Lending Act are akin to sending a soldier into battle with a flak jacket but no helmet. To give our troops full-cover protection, the rules need to be expanded,\u201d said CFPB Director Richard Cordray. \u201cThe Department of Defense\u2019s proposed revisions will go a long way toward better shielding our military from high-cost credit products.\u201d<\/p>\n

Today\u2019s report can be found at:<\/strong> https:\/\/files.consumerfinance.gov\/f\/201412_cfpb_the-extension-of-high-cost-credit-to-servicemembers-and-their-families.pdf<\/span> <\/svg><\/a><\/p>\n

In 2006, Congress passed the Military Lending Act to protect active-duty military personnel, active National Guard or Reserve personnel, and their dependents from predatory lending practices. In 2013, Congress amended the law by, among other things, giving the CFPB specific authority to enforce it.<\/p>\n

The current rules under the Military Lending Act provide servicemembers and their dependents with specific protections for their consumer credit transactions. Among other safeguards, the rules cap the Military Annual Percentage Rate (MAPR) at 36 percent. The rate cap includes certain costs of credit like interest, application and participation fees, and charges for credit insurance and other add-on products. The rules also prohibit lenders from taking account access or a security interest in a vehicle title and they prohibit lenders from requiring servicemembers to submit to arbitration in the event of a dispute.<\/p>\n

Closing Loopholes<\/strong><\/p>\n

The current Military Lending Act rules only apply to three narrowly-defined consumer credit products: closed-end payday loans for no more than $2,000 and with terms of 91 days or fewer; closed-end auto title loans with terms of 181 days or fewer; and closed-end tax refund anticipation loans. <\/p>\n

The Department of Defense recently proposed broadening the scope to generally include credit offered or extended to active-duty military members that has a finance charge or is payable under a written agreement in more than four installments. This would expand the rules to cover many more types of credit, including deposit advance products, and more types of payday, auto title, and installment loans. Specifically, under the Department of Defense proposal: <\/p>\n