The Military Lending Act (MLA) provides special financial consumer protection for active duty servicemembers, and their dependents and families. The MLA is a Federal law that protects servicemembers and military families from predatory lending practices regarding interest rates, loans, fees, disclosures, allotments, and other requirements that a lender may set forth as terms of a consumer loan. As an active duty servicemember or military family member, it is important to understand what your rights are in relation to the MLA, including: what types of loans are covered by the MLA, what types of companies violate the MLA, and what actions you can take to fight a predatory military loan.
As outlined by the Consumer Financial Protection Bureau (CFPB), the MLA provides servicemembers with the following rights:
1. 36% cap on interest rates. A consumer credit provider cannot charge more than a 36% Military Annual Percentage Rate (MAPR). This includes costs such as:
- Finance charges
- Credit insurance premiums
- Add-on credit-related products sold in connection with the credit
- Fees such as application fees and fees for debt cancellation contracts (some exceptions)
2. No mandatory waiver of certain legal rights. A credit provider cannot require you to submit to mandatory arbitration of give up certain rights that protect you under Federal or State law such as the Servicemembers Civil Relief Act.
3. No mandatory allotments. A consumer credit provider cannot require you to create a military allotment as a term of receiving a loan.
4. No prepayment penalty. A consumer credit provider cannot charge a servicemember a penalty for making an early payment for all or part of a loan.
While the MLA does provide certain protections to active duty servicemembers, it is important to know what types of loans are and are not covered by MLA. The loans that ARE covered under the MLA include:
- Installment loans
- Payday loans
- Pawnshop loans
- Deposit advance products
- Tax refund anticipation loans
- Vehicle title loans.
- Overdraft lines of credit but not traditional overdraft services.
- Certain student loans
- Credit cards
- Other consumer credit products
The following types of loans ARE NOT covered by the MLA:
- Residential mortgages
- Other types of secured consumer debt
If you are an eligible servicemember covered by the MLA and believe that one or more of your rights under the MLA have been violated, you should understand what actions you can take to fight back against the consumer credit provider. You should contact an attorney to discuss your specific situation and what actions may be taken. If your rights have been violated, an attorney can help you file a complaint with the Consumer Financial Protection Bureau (CFPB), file a lawsuit, and determine any damages that might be owed as a result.
Brochu Law, PLLC represents Military Lending Act claims on a contingency fee basis. There is no fee unless you win. We advance all costs on behalf of our clients.
Brochu Law, PLLC represents military families and consumers nationwide*
*Disclaimer –Christopher J. Brochu, Esq. is licensed to practice law in the State of Florida. Brochu Law, PLLC works with co-counsel in accordance with state and federal law.
