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Statement of Edmund Mierzwinski, Consumer Program Director
"U.S. PIRG strongly supports the proposal today from the Department of Defense (release) to expand protections to servicemembers and veterans and their families against usury and unfair practices. The new rules update implementation of the 2007 Military Lending Act, bipartisan legislation passed by Congress and signed into law by President George W. Bush, to close loopholes that payday, auto title pawn and other predatory lenders have used to prey on members of the armed services.
"Those who protect this nation certainly deserve protection from scam artists targeting them for usurious financial products. But recall that those 2007 protections were enacted for two reasons: first, to protect those military families and, second, to ensure the nation's military and unit readiness, which suffers when servicemembers are either worried about debts or, worse, denied security clearances to deploy because of negative credit reports due to predatory credit practices.
"We intend to support the proposed new rules (pdf) (comments are due at the end of November) and to work with the Defense Department and its partners, including the Consumer Financial Protection Bureau, to fight predatory lenders who place servicemembers, veterans and their families, as well as our nation, at risk.
"The original 2007 rules were intended to protect servicemembers from payday and other loans with APRs higher than 36% APR, but were drafted in too-narrow ways that allowed predatory lenders to offer the same high-cost products the rule was intended to ban but in a technically legal way, by changing the size or length of the loan. The new rules will guarantee that all these products are subject to a 36 percent interest and fee cap and other protections regardless of the amount or length of the loan."
U.S. PIRG is the Federation of State Public Interest Research Groups. PIRGs are non-prfot, non-partisan public interest advocacy organizations that take on powerful interests on behalf of their members. On the web at www.uspirg.org.
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