Seven years after the Military Lending Act was passed to protect service members from abusive payday lenders, there is growing momentum in Washington to plug gaps in the law that leaves hundreds of thousands of service members financially vulnerable, reports the New York Times. The law, which caps interest rates at 36 for many loans, has not kept pace with high-interest lenders that focus on servicemen and women, both online and near bases.
The law was passed following a series of New York Times articles in 2004 that documented abuses in loans to service members. But it does not cover loans for more than $2,000, loans that last for more than 91 days and auto-title loans with terms longer than 181 days, and lenders have capitalized on those gaps. On Wednesday, the Senate Commerce Committee convened a hearing on abusive military lending, and the Defense Department has begun soliciting public feedback on whether the protections of the Military Lending Act should be expanded to include other types of loans.