July 29, 2021
WASHINGTON – To put an end to abusive and predatory lending practices targeting vulnerable consumers, US Senators Chris Van Hollen (D-MD), Jack Reed (D-RI), Jeff Merkley (D-OR) and Sherrod Brown (D-OH), led the reintroduction of laws that would extend protection to veterans and other consumers under the Military Lending Act (MLA), which caps the annual percentage rate (APR) on consumer credit at 36 percent.
In 2006, Congress passed the MLA to curb predatory payday lenders and other loan product providers who used abusive lending practices to target American troops and lure them into debt traps. However, the legislation left veterans, Gold Star families, and other Americans vulnerable to these lending practices and products.
To date, 18 states and the District of Columbia have passed interest rate caps preventing payday loans. However, the Senators say federal action is needed to protect consumers across the country from the financial harm caused by expensive, exploitative credit products.
In addition to Senators Van Hollen, Reed, Merkley and Brown, the bill is also being approved by US Senators Tina Smith (D-MN), Cory Booker (D-NJ), Richard Blumenthal (D-CT), Brian Schatz (D-HI ), Dianne Feinstein (D-CA), Raphael Warnock (D-GA), Patrick Leahy (D-VT) and Ron Wyden (D-WA).
âFar too many Americans are being cheated of their hard-earned dollars by predatory payday lenders who go after our nation’s consumers – including the men and women who fought and sacrificed so much for our country. This legislation will help prevent these practices and protect our veterans and other consumers by building on the success of the Military Loans Act. I urge the Senate to take immediate action on this sensible bill. ” said Senator Van Hollen.
“The Military Lending Act was a bipartisan success, and predatory lenders shouldn’t be targeted even more because soldiers and their families retire, ditch service, or lose loved ones.” said Senator Reed. âThe Veterans and Consumers Fair Credit Act not only restores that protection of the Military Lending Act for Veterans and Gold Star families, it also ensures that all Americans are protected from financial exploitation. There’s no reason consumers should be billed 300 percent APR to access funds. These types of predatory loans keep individuals trapped in debt cycles and put overwhelming financial burdens on those who can least afford it. Our bill would ensure that consumers are treated fairly and that people are not overwhelmed by shady lending practices. “
“Predatory payday practices that lure military personnel, veterans, Gold Star families, or any hardworking person into debt swirls through high-yield credit are dangerous, amoral, and should be illegal.” said Senator Merkley. âThe passage of the Military Lending Act made a huge difference to active military personnel by banning these risky loans, and veterans and other consumers deserve the same protection. We cannot stand idly by as abusive payday lenders continue to wreak havoc on working Americans. “
âPayday, auto titles, and other seedy credit practices target Ohio’s military families, veterans, and vulnerable consumers with high-yield, predatory loans designed to keep them trapped in a debt cycle. Many Americans have to renew their credit so often that they end up paying more fees than they borrowed. said Senator Brown. “We can put an end to these abusive debt traps by extending the military credit law’s 36 percent interest rate cap to veterans, surviving family members and all consumers.”
Under the Veterans and Consumers Fair Credit Act, the Military Lending Act’s 36 percent APR cap for most consumer credit and its current rules would be extended to all consumers, including Veterans and Gold Star families. The Veterans and Consumers Fair Credit Act also affirms the authority of the Consumer Financial Production Bureau (CFPB) to conduct regulatory audits to ensure lenders are complying with the MLA’s 36 percent APR limit for service members, veterans, and all Americans. The CFPB, which stopped monitoring compliance with the MLA in 2018, recently announced that it will resume these audits.
The legislation has been endorsed by a wide variety of consumers, civil rights, veterans, service member organizations, and lawyers including: Consumer Federation of America; Association of Military Officers of America; National Association of Military Families; Success in training veterans; Americans for Financial Reform; Responsible Lending Center; Consumer campaign; NAACP; National Center for Consumer Law (on behalf of its low-income clients); and Hollister Petraeus and Colonel Paul E. Kantwill, United States (retired), former deputy directors, Consumer Financial Protection Bureau, Office of Servicemember Affairs.