BREAKING: Illegally Overcharging Military Servicemembers to be Easier As CFPB to Stop Supervision of Lendersbladenonline 08/11/2018 0 COMMENTS
WASHINGTON, D.C. – This evening, the New York Times reports that the Consumer Financial Protection Bureau (CFPB) will no longer supervise financial institutions to ensure they are complying with the Military Lending Act (MLA), a law that protects active duty servicemembers from predatory financial practices. The MLA prevents servicemembers from being charged more than 36% interest on most loans and provides other rights, including protection from forced arbitration. Instead of the CFPB conducting oversight of lenders, they will move to a complaint-based system, where CFPB enforcement depends on reporting of illicit activity.
Center for Responsible Lending (CRL) Federal Advocacy Director, Scott Astrada, issued the following statement:
“Ripping-off military servicemembers is appalling and the Military Lending Act took important steps to make it illegal. Under its previous leadership, the CFPB was vigilant in preventing financial companies from preying on servicemembers and their families.
“It is alarming to hear that the Mick Mulvaney-led CFPB is pulling back on this commitment to protecting our troops from financial predators by dropping its supervision of the industry. The move to a complaint-based reporting system is absurd. Military servicemembers should not be expected to prepare for and fight wars – and also to regulate financial companies. The CFPB was given a mission to be the cop on the beat – it shouldn’t be asleep at the station waiting for the phone to ring.
“It is my hope that the CFPB does not move forward with this step. However, I fear that unless there is a public uproar further weakening of the MLA will arrive soon instead.”
The MLA was enacted in response to the 2006 Department of Defense “Report On Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents.” The report found that “[p]redatory lending practices are prevalent and target military personnel…” and that “predatory lending undermines military readiness [and] harms the morale of troops and their families….”
Among the actions the CFPB has taken for the military community:
In 2013, fining payday lender Cash America for overcharging hundreds of active-duty servicemembers or dependents;
In 2013, ordering auto lenders to end their deceptive marketing and lending practices targeting servicemembers and to refund more than $6 million to servicemembers for misrepresenting the true cost of products;
In 2014, secured more than $2.5 million in compensation for servicemembers who experienced abusive illegal debt collection practices, including contact to commanding officers;
In 2015, securing $3.1 million in relief to servicemembers who were charged millions in hidden fees from a military allotment processor;
By early 2017, proved a total of $130 million in due compensation to service members, veterans, and their families that were harmed by illegal predatory financial practices, visiting more than 145 military installations for financial education and other activities, and handled more than 71,000 consumer complaints from servicemembers and their families.