Protecting and Serving Military Credit Consumers

1.46 million active personnel in the U.S. military.

http://us-military-branches.insidegov.com/app-question/443/How-many-people-are-there-in-the-US-military

http://www.globalfirepower.com/country-military-strength-detail.asp?country_id=united-states-of-america

http://www.nctsn.org/resources/public-awareness/month-military-child

http://download.militaryonesource.mil/12038/MOS/Reports/2014-Demographics-Report.pdf

http://download.militaryonesource.mil/12038/MOS/Reports/2014-Demographics-Report.pdf

Military by the Numbers

86.8% of active duty enlisted members are stationed in the United States and U.S. territories.

49.6% of active duty enlisted personnel are 25 years of age or younger

2 million military children in the U.S., ranging in ages from newborn to 18 years old; 1.3 million military children are school-aged

1.1 million active reserve personnel in the U.S. military.

With members of the U.S. military making the ultimate sacrifice – service to country – the government has created several protections to assist with “consumer credit” transactions and their financial lives.

Military Lending Act

Military Lending Act (MLA) – New in 2016Primary Goal: Protect active-duty soldiers from high-rate loans, such as payday loans, car title loans and tax-refund anticipation loans.

• Originally passed by Congress in 2006 and implemented by the Department of Defense (DOD) in 2007

What it covers:• 36% interest rate cap on covered loans to active duty service members• Required disclosures to alert service members to their rights• Prohibits creditors from requiring a service member to submit to arbitration in the

event of a dispute

New rules were introduced in July 2015 and became effective on October 1, 2015. Compliance is required by October 3, 2016, but rules for credit cards is delayed until October 3, 2017.

• Now includes addition of fees paid “for a credit-related ancillary product sold in connection with the credit transaction.” Although the MAPR limit is 36%, ancillary product fees can add up and exceed the MAPR limit.

• Includes a “safe harbor” from liability for lenders who verify the MLA status of a consumer.

• Lenders need to identify who is in active military duty at origination, obtaining information directly or indirectly from the Department of Defense’s DMDC database.

New MLA Regulations

“When I drive down a strip outside a military installation and count 20 fast-cash lenders in less than 4 miles, that’s not a convenience, that’s a problem.”

– Holly Petraeus, CFPB Assistant Director

Servicemembers Civil Relief Act

Primary Goal: Offer an umbrella of protections to military personnel whose service duties conflict with the financial obligations they have as civilians.

• Originally called the Soldiers and Sailors Civil Relief Act when first passed in 1918.

• Got its current name when rewritten and expanded again in 2003

What it covers:• An interest rate cap of 6% on loans military service members incurred prior to

becoming active. Applies to any charges – including credit card debt, service charges and renewal charges or fees – except bona fide insurance. Federally guaranteed student loans were added in 2008.

• Accounts of the service member, or joint accounts of the service member and the service member’s spouse, are additionally eligible.

To receive the interest rate reduction, a service member must request it in writing and include a copy of his or her military orders.

Servicemembers Civil Relief Act (SCRA)

Best Practices to Serve Military Consumers in Financial ServicesAs a lender, you must adhere to SCRA and MLA regulations, so ensure you have systems and governance in place to manage compliance.

Consider adding pages to your website, providing information on SCRA and MLA, so military customers understand their rights and how to best work with you.

If you offer additional military benefits, communicate these. Many lenders offer military rebate programs – don’t be shy in advertising these discounts.

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To learn more about how Experian can help you best service you military consumers and adhere to regulations like MLA and SCRA, visit experian.com/military© 2016 Experian Information Solutions, Inc. • All rights reserved.Experian and the Experian marks used herein are trademarks or registered trademarksof Experian Information Solutions, Inc. Other product and company names mentioned herein are the property of their respective owners.

This information is for educational purposes only. It is not intended to be nor should it be relied upon as legal advice. If you have questions about the information contained herein, you should consult your own legal and compliance departments.