Center for Responsible Lending
Consumer Federation of America
Consumers Union of U.S., Inc.
National Association of Consumer Advocates
National Consumer Law Center (on behalf of its low income clients)
Request for Comments
Implementation of Limitations on Terms of Consumer Credit Extended to
Service Members and Dependents
72 Federal Register 73336-7
(December 27, 2007)
February 25, 2008
The consumer organizations filing these comments submitted detailed recommendations in February and June of last year to the Department of Defense on how to get maximum consumer protections from the Military Lending Act (MLA).(1) We were disappointed that the initial set of regulations covered only three forms of consumer credit subject to the 36 percent rate cap and fair lending requirements, and defined those three narrowly, creating a road map for how to reshape products to evade the law. Already, we are finding lenders that have changed their terms just enough to escape the MLA rules. Major credit providers are essentially uncovered. While not explicitly excluding banks, the initial DOD rules failed to cover credit cards, bank lines of credit, home equity loans, or bank overdraft loans.
We appreciate the Department’s request for further input on expanding regulations to more products. We strongly support giving active-duty Service members and their families the comprehensive protections enacted by Congress. Uniform rules for all forms of credit (excluding mortgages and loans secured by property) will benefit Service members, simplify consumer education and enforcement, and provide a level playing field to the credit industry.
Our comments briefly discuss implementation of the current regulations, then supplement our February 5, 2007 and June 11, 2007 filings regarding open-end credit and credit cards, installment loans, and bank overdraft loans.(2) We also make suggestions for enforcing the current ban on Internet payday loans to covered Service members. Finally, these comments address developing beneficial financial practices to supplant predatory loans for Service members who struggle financially from payday to payday.
For the full comments, click here (PDF format).