The Military Lending Act (MLA) has gone mainstream. First enacted in 2006, the MLA’s aim was to provide protections against predatory lending practices targeted at U.S. service members and their spouses and dependents. But while it once applied only to a short list of credit products, new regulations have greatly broadened its coverage. Now, MLA compliance should make most creditors stand at attention.
As originally adopted, the MLA capped interest rates, retained certain legal rights for borrowers, prohibited certain loan features, and required creditors to make certain written and oral disclosures of interest rates and payment obligations before issuing a loan. But the Act only applied to payday loans, vehicle title loans and tax refund anticipation loans. Compliance was, therefore, not a pressing concern for lenders that did not provide these offerings.
The situation changed dramatically last July with new regulations issued by the U.S. Department of Defense (DoD). Now a large group of creditors, along with a greatly expanded list of credit products, are covered by the Act.
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Source: Fico Press Release