- Woman, two teens arrested following narcotics investigation
- Former county officials charged with theft
- New Zion Baptist participates in National Back to Church Sunday Sept. 21
- Donors celebrate new school health center
- Debris cleanup underway near Fordham Dam
- Some good, some bad in Obama executive order on protecting antibiotics
- Two arrested on cannabis charges after search of detached garage on North Henrietta
- Man guilty of drug charges faces 60 years in prison
- Rockford BBB aware of ‘Microsoft’ phone scam
- Judge: Chad Grimm will remain on Illinois governor ballot
Madigan urges Department of Defense to strengthen protections for service members targeted by predatory lenders
Online Staff Report
CHICAGO — Illinois Attorney General Lisa Madigan (D) urged U.S. Secretary of Defense Chuck Hagel to strengthen regulations under the federal Military Lending Act (MLA) to ensure servicemembers are better protected from abusive lending practices.
Joined by 12 other attorneys general, Madigan submitted a letter to Hagel in response to proposed new rules under the MLA. In 2007, Congress passed the MLA, establishing a 36 percent cap on interest and fees on certain consumer credit transactions with service members. However, the U.S. Department of Defense’s regulations currently limit the protections to three narrow definitions of consumer credit, as follow:
1. Payday loans (only covering loans of up to $2,000, for a term of 91 days or fewer);
2. Vehicle title loans (only covering loans for a term of 181 days or fewer); and
3. Tax refund anticipation loans.
The limited lending products covered by the MLA have allowed predatory lenders to structure their high-cost loans in a way that evade the regulations. For instance, lenders offer payday loans starting at $2,001, or require a minimum repayment period of 92 days, allowing them to avoid the 36 percent interest rate cap.
“Service members are unfortunately prime targets for predatory lenders,” Madigan said. “The Department of Defense must close the loopholes in the law because those who serve our country don’t deserve to be defrauded by predatory lenders.”
Madigan and the other attorneys general stressed that the protections in the MLA should apply uniformly to all consumer credit loans. They also raised concern about a lack of coverage for any open-ended or revolving payday loans; any bank loan that is secured by funds on deposit, such as overdraft loans; and any retail sales credit loan or other similar rent-to-own transaction, including those where the loan claims to be “secured” by personal property that bears, in actuality, no relationship to the amount of the credit advanced.
Attorneys general from the following states joined Madigan in the letter to Hagel: California, Delaware, Florida, Indiana, Kentucky, Montana, North Carolina, Nevada, New York, Oregon, Tennessee and Washington.
Posted June 24, 2013