DoD plans rules on predatory lending
June 2, 2014 – The Defense Department submitted a report to Congress detailing more extensive rules to combat predatory lending targeting servicemembers.
According to The Military Times, the department’s report showed that 11 percent of servicemembers are being charged interest rates above 36 percent, in violation of the Military Lending Act, through a combination of payday loans, bank deposit advances, installment loans and other suspect services.
The paper said defense officials are crafting more comprehensive rules to increase protections for troops. Those new rules to prevent such high interest rates may be published in the Federal Register this summer.
The report said financial literacy was not enough: “DoD is not likely to persuade service members through current financial literacy programs alone that using high-cost loans is not in their long-term best interest,” the paper quoted the document as saying.
The report also said that servicemembers responding to a survey said they are reluctant to seek loans from military relief societies, rather than go to payday lenders. The paper listed military credit unions as a lower-cost option that stricter rules might persuade servicemembers to seek out.
Military Times article