In dismissing a class action last month alleging violations of the Military Lending Act (“MLA”), a federal district court in Virginia held that the MLA’s two-year statute of limitations is triggered by discovery of the facts underlying the violation, not by discovery that the MLA had been violated. Finding the MLA’s text to be inconclusive on this issue, the court looked to case law interpreting a similar statute of limitations in the Fair Credit Reporting Act (“FCRA”) for guidance.… Continue Reading
A new report from the Urban Institute examining the 2015 expansion of the Military Lending Act (“MLA”) concludes that it did not lead to better credit and debt outcomes for servicemembers and may instead have limited access to credit for some servicemembers with deep prime credit scores. The report, titled “The Effects of APR Caps and Consumer Protections on Revolving Loans: Evidence from the 2015 Military Lending Act Expansion,” used credit bureau data to assess the impact of the MLA’s expansion on credit card ownership rates, credit limits, delinquency rates, and credit scores of MLA covered borrowers with subprime credit scores. … Continue Reading
The Consumer Financial Protection Bureau (CFPB) recently highlighted its concerns regarding the use of military allotments for loan repayment, inviting servicemembers who believe they have been treated unfairly by companies seeking repayment through the military allotment system to file complaints with them so that they can investigate further.
A military allotment is an automatic deduction from a servicemember’s military pay that can be designated towards a recurring payment obligation. … Continue Reading
The Department of Defense (DoD) has issued a report to the House Committee on Armed Services regarding the impact of a Military Annual Percentage Rate (MAPR) cap lower than 30% on military readiness and servicemember retention. The DoD, in consultation with the Treasury Department, was required to provide the report by the National Defense Authorization Act for Fiscal Year 2021.… Continue Reading
On December 30, 2020, the CFPB announced a consent order with Omni Financial of Nevada, Inc. based on alleged violations of the Military Lending Act (MLA) and Electronic Funds Transfer Act (EFTA). This is the second consent order announced as part of a sweep of investigations for potential MLA violations.
According to the CFPB, Omni as an installment lender making tens of thousands of loans annually, generally in smaller amounts, ranging from $500 to $10,000. … Continue Reading
In a new interpretive rule published on February 28, 2020, the Department of Defense (DoD) has announced that it is withdrawing guidance previously issued in its December 14, 2017 Interpretive Rule, Q&A #2, governing motor vehicle and other personal property financing, and will revert back to the position it set forth in the original Q&A #2 published in the August 26, 2016 Interpretive Rule. … Continue Reading
The Department of Defense announced in its Fall 2019 rulemaking agenda that it is engaged in proposed rulemaking to amend its Military Lending Act (MLA) regulations, apparently in order to allow non-bank creditors to provide secured auto financing for purchase transactions. (The DoD’s agenda was filed as part of the Fall 2019 Unified Agenda of Federal Regulatory and Deregulatory Actions, which is coordinated by the Office of Management and Budget.)… Continue Reading
NPR reported last week that the Trump Administration is planning to end the current prohibition under the Military Lending Act (“MLA”) against creditors offering service members GAP insurance in connection with credit intended to finance the purchase of motor vehicles. Current interpretive guidance concerning the Department of Defense’s regulations implementing the MLA prohibits creditors from financing GAP insurance – insurance that covers the difference in the actual cash value of a motor vehicle and the balance still owed on the financing – in purchase money transactions with protected service members and their dependents.… Continue Reading
On August 1, 2018, Sen. Bill Nelson (D-Florida) introduced S. 3334 captioned “The Military Lending Improvement Act of 2018” in the United States Senate to “expand and improve” credit protections afforded to service members by the Military Lending Act (MLA) and the Fair Debt Collection Practices Act (FDCPA). If this bill becomes law, it would lower the maximum rate of interest on covered transactions from 36 percent to 24 percent. … Continue Reading
Last week the Department of Defense (DoD) issued an interpretive rule under the DoD’s Military Lending Act final rule (MLA Rule). The interpretive rule amends four of the “Q&A” format interpretations that DoD issued on August 26, 2016. Readers may recall that the DoD published this guidance just over one month before the MLA Rule’s October 3, 2016 compliance deadline for most products other than credit cards.… Continue Reading