U.S. Sen. Bill Nelson (D-Fla.) today called on the Consumer Financial Protection Bureau (CFPB) to continue taking the steps necessary to protect U.S. service members from predatory lenders, instead of turning a blind eye. [Read more…] about Nelson calls on CFPB to protect servicemembers from predatory lenders
U.S. Sen. Bill Nelson (D-FL) filed legislation Thursday aimed at further protecting U.S. service members and their families from predatory lenders, including those who open up businesses outside the entrance to military bases and offer loans to members of the military at a much higher rate than those offered to members of the general public.
“Our military men and women have dedicated their lives to serving our country and we must help ensure they do not become the targets of unscrupulous lenders,” said Nelson, a senior member of the Senate Armed Services Committee. “This legislation will help provide our men and women in uniform with financial stability for their futures.”
If approved, Nelson’s measure would, among other things, set the maximum interest rate that a lender can charge a U.S. service member for most loans at 24 percent. It would also prohibit debt collectors from making abusive telephone calls to a service member’s commanding officer, and extend protections beyond active duty service members to also include recently discharged veterans – many of whom continue to serve in a reserve capacity.
The legislation, which Nelson introduced as an amendment to this year’s National Defense Authorization Act, would amend a 2006 law that Nelson and others passed to protect members of the military from the predatory lending practices.
That bill, which capped the interest rate on most loans made to active duty service members and their families at 36 percent, has been hailed as a success in cracking down on the most egregious lending practices that military families face, but it didn’t go far enough to end the practice altogether.
To further protect service members and their families, the legislation Nelson introduced this week would:
- Reduce the interest rate ceiling from 36 to 24 percent to reduce incentives for aggressive lending.
- Extend the protections of the Military Lending Act to veterans who have been discharged from active duty military service for one year or less.
- Apply the Military Lending Act to auto loans and other secured loans for personal property.
- Prohibit debt collectors from making abusive telephone calls to a service member’s commanding officer or threatening that failure to cooperate with a debt collector will result in action from the Uniform Code of Military Justice.
- Require the Department of Defense to review the data protection requirements for credit reporting agencies that use information on service members obtained from DOD databases.
- Prohibit the use of GPS trackers and “kill switches” in cars as a condition of an auto loan to service members, which could imperil service member readiness and privacy.
The Military Lending Improvement Act of 2018 is supported by Veterans of Foreign Wars.
A copy of the bill is available here.