Van Hollen and colleagues seek to cap consumer lending at 36%
July 29, 2021
WASHINGTON – In an effort to end predatory and abusive lending practices that target vulnerable consumers, U.S. Senators Chris Van Hollen (D-MD), Jack Reed (D-RI), Jeff Merkley (D-OR) and Sherrod Brown (D-OH), led the reintroduction of legislation that would extend protections under the Military Lending Act (MLA), which caps the annual percentage rate (APR) on consumer loans at 36%, to cover veterans and other consumers.
In 2006, Congress passed the MLA to curb predatory payday lenders and other loan product providers who used abusive lending practices to target and lure US troops into the debt trap. However, the legislation has 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 that prevent payday lending. But senators say federal action is needed to protect consumers nationwide from the financial damage of expensive and abusive loan products.
In addition to Senators Van Hollen, Reed, Merkley and Brown, the bill is also co-sponsored 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).
“Far too many Americans are having their hard-earned dollars stolen by predatory payday lenders who prey on consumers in our country, including the men and women who fought and sacrificed so much for our country. This law will help prevent these practices and protect our veterans and other consumers by building on the success of the Military Lending Act. I urge the Senate to move forward on this common sense bill immediately ”, said Senator Van Hollen.
“The Military Loan Act has been a bipartisan success, and predatory lenders should not be given more targets just because military personnel and their families retire, separate from honorable service, or lose loved ones.” Senator Reed said. The Fair Credit Act for Veterans and Consumers not only restores the protections in the Military Loan Act for Veteran and Gold Star families, but also ensures that all Americans are protected. against financial abuse. There is no reason consumers would have to pay 300 percent APR to access credit. These types of predatory loans trap people in cycles of debt, adding crushing financial burdens on the backs of those who can least afford them. Our bill would ensure that consumers are treated fairly and prevent people from being overburdened with shady lending practices. “
“Payday predatory practices that lure military personnel, veterans, Gold Star families, or any individual worker into debt vortexes through high interest loans are dangerous, amoral and should be illegal.” said Senator Merkley. “Passing the Military Lending Act has made a huge difference to active duty military personnel by banning these risky loans, and veterans and other consumers deserve the same protections. We cannot stand idly by as abusive payday lenders continue to inflict financial ruin on American workers.
“Salary, Car Title, and Other Shady Lending Practices Target Military Families, Veterans, and Vulnerable Ohio Consumers with Predatory High Interest Loans Designed to Trap Them in a Cycle of Debt . Many Americans have to renew their loans so many times that they end up paying more in fees than the amount they borrowed, ” Senator Brown said. “We can end these abusive debt traps by extending the 36% Military Lending Act limit on interest rates to veterans, surviving family members and all consumers. “
Under the Fair Credit for Veterans and Consumers Act, the Military Loans Act’s 36% APR limit on most consumer loans and its current rules would be extended to all consumers, including including veterans and Gold Star families. The Veterans and Consumers Fair Credit Act also confirms the authority of the Consumer Financial Production Bureau (CFPB) to conduct supervisory reviews to ensure lenders comply with the MLA’s 36% APR cap for military, alumni. fighters and all Americans. The CFPB, which stopped overseeing compliance with the AMLA in 2018, recently announced that it is resuming these exams.
The legislation has been endorsed by a wide variety of consumers, civil rights, veterans, military organizations, and advocates, including: the Consumers Federation of America; Association of Military Officers of America; National Association of Military Families; academic success of veterans; Americans for financial reform; Center for Responsible Lending; Consumer action; NAACP; National Center for Consumer Law (on behalf of its low-income clients); and Hollister Petraeus and Col. Paul E. Kantwill, United States (retired), former deputy directors, Bureau of Consumer Financial Protection, Office of Servicemember Affairs.