For 3rd week of Military Consumer Month, the Consumer Financial Protection Bureau’s Office of Servicemember Affairs is emphasizing two vital military consumer protection laws: the Military Lending Act (MLA) and the Servicemembers Civil Relief Act (SCRA).
Congress enacted the MLA to protect active-duty members of the military and their covered dependents from risky lending practices. MLA protections for covered loans include (1) limiting the Military Annual Percentage Rate to a maximum of 36%, (2) prohibiting mandatory arbitration clauses, and (3) prohibiting lenders from requiring a military allotment to get a loan. The CFPB recently issued an interpretive rule that explains the basis for their authority to examine supervised financial institutions regarding MLA violations.
This week, the CFPB released an updated flowchart that contains guidance to help servicemembers better understand their rights under the MLA.
The SCRA is another important tool for active duty servicemembers. It allows active duty servicemembers to (1) reduce interest rates on their pre-service loans, (2) terminate some residential and auto leases without penalty when transferred or deployed, and (3) special protections against the repossession of property. The CFPB released a consumer advisory on SCRA waiver rights and updates to its lease termination notification options.
The Misadventures in Money Management (MIMM) program has a gamified virtual learning experience dedicated to training future and current servicemembers how to navigate the financial landscape and learn about protections they have. We strongly encourage you to access MIMM to follow MIMM’s Angela character through her journey, which includes understanding the SCRA.
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