U.S. Representative Colleen Hanabusa (HI-01) has joined with House colleagues in calling on the Department of Defense provide more financial protection of military personnel, who have been targeted by high-cost credit providers.
In a letter to Secretary of Defense Chuck Hagel, 54 members of the House have asked that the DoD expand the definition of "consumer credit" to protect military personnel from excessive interest and fees associated with payday loans, vehicle title loans, and loans structured as open-end credit.
"For a variety of reasons, our military personnel are particularly vulnerable to predatory lending schemes," Hanabusa said. "I had the opportunity last year to join Holly Petraeus, Assistant Director of the Consumer Financial Protection Bureau Office of Servicemember Affairs, in speaking to military leaders and servicemembers in Hawaii. Their stories were moving and their concerns very real. The Department of Defense has an opportunity right now to expand the definitions of consumer credit to ensure that lenders do not make excessive profits off of individuals who serve our nation. We have a duty to protect them not only in battle, but also at home when the challenges of service expose them to potentially long-lasting and devastating effects on their financial well-being."
According to the letter, "All too often, our Service Members have been targeted by high-cost credit providers. The resulting inappropriate loans and exorbitant interest payments force many members of the military and their families to forego other necessities, such as housing or grocery bills, and in many cases, take out additional loans. This exacerbation of their financial condition negatively affects their morale and puts their ability to do their job--which is defending our great nation--at risk."
While Congress passed the Military Lending Act in 2007 to directly address some of these concerns, current protections do not extend to payday loans for amounts larger than $2,000 or with a loan term longer than 91 days, vehicle title loans with terms longer than 181 days, or loans structured as open-ended credit. The letter asks that the definition of consumer credit be modified to ensure that service members in all states are protected from all forms of high-cost credit, regardless or the duration or structure of the loans.