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The Military Lending Act credit-card compliance deadline goes into effect Oct. 3, and today's post on the NAFCU Compliance Blog focuses on whether the MLA credit-card rules should be applied retroactively.

NAFCU Regulatory Compliance Counsel Jennifer Aguilar summarizes sections addressing these parts of the rules and explains that the MLA applies at the time the member "becomes obligated on a credit transaction or establishes an account for credit."

"This suggests that whether a particular transaction is covered by the MLA is determined at consummation," she writes. "This is supported by the fact that sections 232.12 and 232.13 state the rules do not 'apply to [a credit card account] that is extended and consummated before October 3, [2017].' "

Aguilar writes that the preamble of the rule "indicates that the DOD believes that credit unions are in the best position to determine whether a transaction is covered at the outset and there is no ongoing requirement to ensure the transaction is still not covered." She adds that the DoD also does not expect the credit union industry to apply the rules retroactively to existing accounts.

"The DOD appears to apply the same logic to certain changes to existing credit accounts," she writes. "Increasing a credit is not considered 'extending' credit under the MLA if the account and its terms are already established."

She adds, however, that the rule is unclear on whether other actions, including adding a joint owner or changing a rate, will trigger MLA protections. "For these changes, a credit union may need to review its underwriting process and internal procedures to make a determination whether new credit is being extended or a member is becoming obligated on or establishing credit," she explains. "The credit union may also want to reach out to its attorney to assist the credit union in making a determination or assessing the particular legal risks involved."