A new government report says payday lenders are taking advantage of soldiers through of a loophole in a law designed to protect military families.
The Consumer Financial Protection Bureau (CFPB) released a report on Monday that found loopholes in the Military Lending Act allow companies to offer high-cost loans to military families.
{mosads}The report comes as the Defense Department is pushing to broaden the scope of the Military Lending Act, which Congress passed in 2006 to help protect active-duty military personnel from predatory lending practices.
In 2013, Congress gave the CFPB oversight of enforcing the law.
“The current rules under the Military Lending Act are akin to sending a soldier into battle with a flak jacket but no helmet. To give our troops full-cover protection, the rules need to be expanded,” said CFPB Director Richard Cordray in a public statement. “The Department of Defense’s proposed revisions will go a long way toward better shielding our military from high-cost credit products.”
The report found that lenders took advantage of military families through high interest rates, participation fees and other add-on products.