Senate Dems Ask DOD to Protect Service Members From Predatory Lenders

August 15, 2013
The Hill  
payday lending news

A group of Senate Democrats have petitioned Defense Secretary Chuck Hagel asking him to close a loophole in lending protections that they said leaves service members susceptible to abuse under certain kinds of loans. The 23 legislators wrote in their letter that payday lenders "cluster" around military bases and target advertising toward enlisted personnel.

While the Department of Defense has authority to write rules to protect service members from certain predatory financial products, the senators argued that the department failed to include high-interest products -- such as overdraft loans, installment loans, and nontraditional payday loans -- in its definition of consumer credit. As a result, they said, "certain lenders are offering predatory loan products to service members at exorbitant triple digit effective interest rates and loan products that do not include the additional protections envisioned by the law."

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