Few people would argue that our military service members who put their lives on the line defending our country and our freedoms deserve fair treatment and respect. One of the steps the federal government has taken to ensure that military personnel get fair treatment is through the Military Lending Act, which protects active duty members of the armed forces, reserves, or National Guard from predatory lending practices.
However, the law passed back in 2006 had a few loopholes when it came to particular types of consumer credit. President Obama announced in July that the Department of Defense will tighten those loopholes and expand protections for troops and their families.
New rules start taking effect on Oct. 1, 2015 — and will be phased in over a couple of years — extending the protections of the Military Lending Act to:
- Credit cards
- Payday loans
- Loans against vehicle titles
- Tax refund loans
- Deposit advance loans
- Installment loans
- Unsecured lines of credit
The act provides a number of specific rights and protections to military personnel and their families when they need consumer credit. The act doesn’t apply to home mortgages or car loans. For other types of loans and credit, the act provides the following protections to service members, their spouses, and some of their dependents:
- The annual percentage rate for is capped at 36 percent. The cap includes interest, fees, premiums for credit insurance, service charges, renewal charges, or fees for extra products sold along with a loan. The total of all of those can’t exceed a 36 percent APR.
- Creditors have to notify you both orally and in writing what interest rates and fees you’ll pay for credit before you take out the loan.
- Creditors aren’t allowed to roll loans over or refinance your loan unless you get better terms from the refinance.
- Creditors can’t require you to waive mandatory consumer protections, such as waiving your rights under the Servicemembers Civil Relief Act.
- Creditors can’t require you to submit to mandatory arbitration if there’s a dispute over your loan or account.
- Creditors can’t require you to set up automatic payments out of your paycheck to pay the loan or credit.
- Creditors can’t charge you a penalty if you pay some or all of your loan or credit early.
When a creditor violates the rules and coerces you into unfair terms or charges you more than the law allows, you may have some recourse. You can make a complaint to the Consumer Financial Protection Bureau if you think a creditor has acted in violation of the rules. As an active military service member, you also can talk to your local Judge Advocate General’s office about how the Military Lending Act is supposed to protect you and your family.
You can also talk to a private attorney about your options. If you’re stationed in Ohio or your family lives in the state, an Ohio consumer lawyer can talk about how consumer protection in Ohio laws might be able to help you. A lawyer also might be able to help if you’ve become overwhelmed by debt because of the actions of a predatory lender or creditor. Call Ohio consumer lawyer Jeremy Heck at (888) 726-3181 for a free consultation about your financial situation today.