WASHINGTON D.C. – Ahead of the U.S. Senate Banking Committee hearing today on ‘Ensuring Financial Protection for Servicemembers, Veterans, and Their Families’, government watchdog Accountable.US looks back on how the predatory lenders suing to weaken the Consumer Financial Protection Bureau (CFPB) have fought against interest rate caps for military families and have been subjected to millions of dollars in fines for violating the Military Lending Act.
The Community Financial Services Association of America (CFSA), a top trade group for the payday loan industry, is leading a lawsuit before the U.S. Supreme Court challenging the CFPB’s independent funding structure – a naked attempt to shutter the nation’s leading consumer advocate by subjecting its funding to political and corporate money obstruction in Congress. The lawsuit holds dire consequences for America’s servicemembers as the CFPB is the only federal financial regulator with an office devoted to addressing the specific threats those in uniform face from the financial industry. The CFPB also helps enforce the Military Lending Act (MLA) – one of the strongest consumer protection laws on the books that provides special protections for active duty servicemembers, like capping otherwise triple-digit interest rates on many loan products. This is among the reasons why predatory lenders want to take the agency out of commission.
An Accountable.US review found Darrin Andersen, president of payday lender QC Holdings and CFSA board member suing the CFPB, has compared payday loan restrictions to a book ban and openly admitted his company stopped lending to servicemembers because a 36% interest rate wasn’t high enough. And a parent company of another CFSA board member, Enova International, was previously ordered by CFPB to pay a $5 million fine and $14 million in refunds for “violat[ing] the Military Lending Act by illegally overcharging servicemembers and their families.”
America’s military members, veterans and families have among the most to lose if predatory lenders convince the Supreme Court to gut the Consumer Financial Protection Bureau. Payday industry CEOs want to weaken the agency so they can get away with abusing servicemembers with triple-digit interest rates and other shady practices they’re notorious for."
Accountable.US’ Liz Zelnick.
In 2022, credit or consumer reporting issues made up 54% of all service member complaints to the CFPB. Since its inception, the CFPB has analyzed hundreds of thousands of complaints from servicemembers, veterans, and military family members. Additionally, military consumers reported nearly 50,000 cases of identity theft in 2021 alone. The CFPB has helped servicemembers get their lives back by ensuring that financial institutions take action when military families report identity theft.