This story appeared in Bank Digest.
The Consumer Financial Protection Bureau has issued a report highlighting how "loopholes in the current Military Lending Act rules are racking up costs for servicemembers." According to the report, these gaps have allowed companies to offer high-cost loans to military families by skirting the 36 percent rate cap and other military-specific credit protections. The bureau included these findings in a comment filed in support of the Department of Defense's proposal to broaden the scope of the Military Lending Act rules to cover deposit advance products and more types of payday, auto title, and installment loans.
"The current rules under the Military Lending Act are akin to sending a soldier into battle with a flak jacket but no helmet. To give our troops full-cover protection, the rules need to be expanded," said CFPB Director Richard Cordray. "The Department of Defense's proposed revisions will go a long way toward better shielding our military from high-cost credit products."