Predatory lenders are exploiting America’s armed forces families despite a nearly decade-old law that’s supposed to protect servicemembers, the Consumer Financial Protection Bureau (CFPB) said this week, and the Pentagon should quickly finalize and implement a new slate of rules for lenders who do business with military families.
Holly Petraeus, the CFPB’s top official for armed services issues, sent the Department of Defense a letter just after Christmas recommending that the agency put the new rules into effect swiftly. On Monday, the agency backed up that letter with a report detailing exactly how and how often servicemembers fall prey to lending abuses that seem like they should be covered under the 2006 Military Lending Act (MLA).
The report found that military families are significantly more likely to use one or another form of deposit advance services than the overall American population. While fewer than 16 percent of the country as a whole uses such loans, according to previous CFPB research, more than 22 percent of military families take advantage of those loans. At an estimated $50 million in annual borrowing, those families are paying a combined $5 million a year in fees, according to Monday’s report.