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Credit cards and installment loans that are sold to active-duty military members would be subject to a series of consumer protections under the new Defense Department proposal. High-cost lenders easily evaded the earlier rules, which applied more narrowly.
September 26 -
Banks, credit unions, payday lenders and installment lenders are likely to feel the impact of restrictions on loans to members of the military that the Defense Department has proposed.
September 26 -
New York State Attorney General Eric Schneiderman today announced the launch of a financial consumer education web app called AGScamHelp.
December 2 -
What initially appeared to be a listening session by a key federal regulator about access to checking accounts has sparked concerns that the agency may be seeking to go much further in dictating how and when banks open accounts for consumers.
October 27
A Defense Department proposal to strengthen financial protections for military personnel is still too weak, according to attorneys general from 20 states.
The department proposed rules in September to strengthen protections for active-duty members of the military from the pitfalls of small-dollar consumer credit. The proposal is supposed to make it harder for high-cost lenders to dodge an annual percentage rate cap of 36% for service members, and it would do other things including
The attorneys general, including Eric Schneiderman of New York and Lisa Madigan of Illinois, on Monday urged Pentagon officials to make at least two major changes.
They seek the elimination of an exemption to the 36% cap that would be granted to "bona fide" credit card fees that are "reasonable and customary."
That exception "will open a wide door through which abusive fees of creative lenders may pass," the attorneys general wrote in a letter to the Pentagon as part of the public comment process tied to the plan.
The letter also criticizes the plan for failing to tighten an exemption for loans that are secured by purchased property. "Unscrupulous lenders are willing and able to use this exemption regularly and disingenuously to cover transactions that exemplify the abusive credit practices Congress sought to ban," the letter said.
It cited the example of a now-defunct Atlanta firm, Smart Buy/Rome Finance, that persuaded service members to purchase household electronics and other items at 300% markups. The loans were "nominally" secured by the items, allowing the lenders to skirt the lending cap, the letter said.
