Compliance Blog

Dec 12, 2014
Categories: Consumer Lending

Comment Letter Talking Points for DoD’s Military Lending Act Proposal; Recent Policy Changes to Military Allotment Process

Written by Quincy Enoch, Military Liaison

Hello and Happy Holidays,

The Holidays are fast approaching which means the comment period deadline for the Department of Defense (DoD) lending rule is approaching fast as well. As Mike and I noted in our November 21st post, this rule is going to impact all credit unions by creating additional compliance burdens for all credit unions.

Understanding the impact the DoD proposed rule will have on the credit union industry, many of our members have expressed interest in sending comments to DoD. With this in mind, NAFCU has prepared a helpful guide to look to when preparing your comment letters. If you have any questions, please don’t hesitate to contact me at

DoD rule talking points


Additionally, I would like to mention a recent change to the military allotment process. According to DoD, as a result of abuses of the allotment system by predatory banks and retailers, Secretary Hagel has prohibited the use of allotments to pay for particular items (for only active duty troops). These items include:

  - Vehicles (e.g., automobiles, motorcycles, boats);

  - Appliances or household goods (e.g., washer, dryer, furniture);

  - Electronics (e.g., laptop, tablets, cell phone, television); or,

  - Other consumer items considered to be tangible and movable.

The policy change is with respect to new allotments and will not affect any current allotments. The prohibition will only apply to allotments started on or after the effective date, which is January 1, 2015. The policy change will not affect allotments to savings account, checking accounts, investments, mortgages or rent.

These policy changes were made under Secretary Hagel’s authority to make changes to the Financial Management Regulation (FMR) and did not require the typical rulemaking procedures. To enforce the prohibition, DoD will require servicemembers to certify under penalty of the Uniform Code of Military Justice (UCMJ) that the allotment is not being set up for the purpose of the purchase, lease or rental of personal property or payment towards personal property.

Some helpful links:

DoD Announcement

Fact Sheet