CFPB targets predatory payday lending to military
Sept. 18, 2013 – The CFPB issued guidelines for its examiners on Tuesday aimed at protecting servicemembers from predatory payday lending through the Military Lending Act, which caps annual percentage rates at 36 percent.
In 2012, Congress gave the bureau the authority to enforce the MLA, which was originally passed in 2007. In addition to capping the annual percentage rate, the law prohibits rolling loans over, signing away servicemembers’ rights under the Servicemembers Civil Relief Act and requiring allotments to repay loans.
“Protecting servicemembers is a priority for the CFPB,” bureau Director Richard Cordray said. “We will use the authority Congress gave us to enforce the Military Lending Act and to safeguard our men and women in uniform from illegal payday loans.”
The MLA applies to all closed-end loans of $2,000 or less with terms of 91 days or fewer.
NAFCU Regulatory Affairs Counsel PJ Hoffman said NAFCU supports the impetus behind the guidelines: “Providing responsible lending and financial products that work best for our members are the bedrock on which credit unions operate.”