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.
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.