The Military Lending Act (MLA) is a federal law that provides financial protection to active duty service members and their families. Enacted in 2006 and expanded numerous times, the MLA covers many forms of borrowing. The MLA offers safeguards against predatory lending practices like short-term, high-interest, and installment loans, which may threaten military readiness and servicemember enrollment.
What are MLA protections?
MLA protections include:
- An interest cap of 36% interest cap (known as the “Military Annual Percentage Rate” or “MAPR”)
- No mandatory allotments
- No prepayment penalty
- No mandatory waivers of state and federal consumer protections
- No requirement to supply creditors with access to bank accounts
Who is eligible under the MLA?
The MLA is intended for active duty United States service members, spouses, and certain dependents. Active reserve members, National Guard troops serving on Title 10 orders, and dependents with a valid military ID. Unfortunately, the MLA does not cover retired service members unless they are dependents of an MLA-covered servicemember.
What types of borrowing does the MLA cover?
The MLA covers a wide variety of personal loans, including:
- Payday loans
- Deposit advance loans
- Overdraft lines of credit
- Vehicle title loans
- Installment loans
However, some types of loans are not covered by MLA, including:
- Mortgages to build or buy a house
- Refinanced Mortgages
- Home equity loans or home equity lines of credit (HELOC)
- Reverse Mortgages
- Auto loans secured by that vehicle
- Some types of collateralized loans
The MLA does not cover credit that began prior to one’s MLA eligibility, and the protections on credit also end once MLA eligibility ends. It also does not cover borrowing done for commercial and business reasons, nor do they protect institutions and corporations. Before agreeing to a loan, it is vital for you to understand its relationship to the MLA and whether it is covered or not.
What kind of relief is available if a lender violates the MLA?
You may be entitled to financial relief if a lender violated your rights under the MLA. Credit agreements that do not comply with the MLA are void from inception and you should be able to recover money spent on these illegitimate loans. Of course, you should consult with an experienced attorney to find out if you are eligible to bring a lawsuit under the MLA.
What should I do if I think my MLA rights have been violated?
Edelson Lechtzin LLP is a national class action law firm with offices in Pennsylvania and California. In addition to cases involving consumer fraud, our lawyers focus on class and collective litigation in cases alleging violations of the federal antitrust laws, securities and investment fraud, wage theft and unpaid overtime, employee benefits plans, and dangerous and defective drugs and medical devices.