ATLANTA, GA, September 26, 2014 – Georgia Watch applauds the Department of Defense for issuing new proposed rules earlier today to protect service members and their families from predatory lending practices. The new rules update implementation of the Military Lending Act, bipartisan legislation passed by Congress and signed into law by President George W. Bush, to close loopholes predatory lenders have used to prey on members of the armed services
“The military has rightly identified protecting members of the armed services and their families from abusive lending practices as vital to military readiness,” said acting Georgia Watch Executive Director Liz Coyle. “Exploitation, in any form, of the very people who protect our country is clearly wrong. We believe the rules announced today will crack down on predatory practices and strengthen our community as a whole.”
The Military Lending Act limited loans to members of the military to a 36% annual percentage interest rate. Predatory lenders have used loopholes and created new, sky-high interest rate loan products to circumvent the narrow definitions the Department of Defense used in its original regulations implementing the law. Often marketed as a quick fix to a cash crunch, the defective and predatory loans currently targeting members of the military are designed to trap them in a cycle of debt they cannot escape. Many lenders charge effective interest rates over 400% when factoring in exorbitant fees and worthless insurance products often sold with loans.
Georgia Watch opposes predatory lending practices and has been a strong advocate of reforms to protect consumers and their families. “Today’s new rules are a mark of the Department of Defense’s true commitment to doing what is in the best interest of service members,” Coyle said.
Founded in 2002, Georgia Watch is a statewide consumer advocacy organization working to empower and protect Georgia consumers on matters that impact their wallets and quality of life. Through education, advocacy and policy development, Georgia Watch focuses on safeguarding consumer protections in personal finance, as well as ensuring lower utility bills, cleaner energy, access to quality, affordable healthcare, protecting the right to trial by jury and promoting access to the courts.