Active duty servicemembers are highly protected when it comes to managing their finances. A federal law like the Military Lending Act (MLA) aims to ensure that those in the military, along with their families, are less likely to suffer financial hardship, especially while enlisted.
Financial institutions must adhere to special rules when dealing with service members, not least to ensure that they do not suffer unduly from the nature of their jobs. Active service is highly demanding and can involve enforced lifestyle changes that do not apply to civilians, such as enforced relocations. The refusal of a financial institution to provide credit services, reasonable interest rates, or home loans could feasibly leave someone proudly defending their country at a significant disadvantage.
Military lending laws are strict, and rightly so. However, lenders are not always up to date with the regulations or intentionally bend or break the rules. Doing so is unfair to the service member, but they can always turn to a specialist Military Lending Act violation lawyer to help ensure compliance.
Concerned About Military Lending? Call Bell Law Today
If you believe that you have been treated unfairly by a lender or financial institution, and their practices involve MLA breaches, then we encourage you to speak to an attorney from Bell Law.
Above all, you can rely on our experience and expertise to ensure you’re treated fairly, your rights are respected, and your best interests are always the top priority. Our attorneys understand the unique circumstances faced by those in the armed forces. They can apply that experience to interpreting federal laws governing everyone from big banks to the local credit union.
Crucially, we don’t provide general information. We take great pride in our personalized service. Every case is different, even if it is based on the same federal laws, so we always pursue each one on its merits and with your best interests in mind.
Even if you’re unsure whether a lender has breached the MLA, we can help you understand the situation. Our initial consultations are free, and with no obligation, so it makes perfect sense to find out more if you have any concerns at all.
The lives of military servicemembers pose enough unique challenges without being misled or taken advantage of by finance companies. So, if you have any concerns or questions regarding your dealings with them, contact the Bell Law offices in Kansas City now at 816-281-0649.
What the Military Lending Act (MLA) Means For You
The Military Lending Act is enforced at the federal level and primarily deals with lending practices. It applies to all active duty servicemembers, their spouses, and certain dependants, such as their children. Crucially, the MLA extends to those on either active Guard or active Reserve duty.
Key MLA Provisions
Perhaps the best-known provision in the MLA is a cap on the Military Annual Percentage Rate (MAPR). Lenders cannot charge more than 36% MAPR to those that qualify for protections under the MLA. The onus is also on them to factor in additional fees and charges beyond the standard repayment schedule. That means insurance premiums, additional products linked to the first, and additional fees.
There are further protections too. A lender cannot require active duty servicemembers to waive certain legal rights, such as forcing them to submit to mandatory arbitration. They must also respect additional rights conferred by other federal laws, such as the Servicemembers Civil Relief Act (SCRA).
Naturally, these additional protections are available to Army, Navy, Air Force, and National Guard members without replacing any federal law that applies to all US citizens. For example, service members are covered by the Truth in Lending Act (TILA), just like anyone else.
What’s Covered by the Military Lending Act?
Before filing a claim against a lender, it is important to remember that the MLA was enacted specifically with service members in mind. As such, it is heavily weighted towards the kinds of credit arrangements that may directly impact someone’s ability to suitably carry out their duties.
For example, service members are covered by the rules of the Act for payday loans, vehicle title loans, and installment loans. However, they are not considered covered borrowers for installment loans taken out for purchased property where that property is used as collateral.
Likewise, the MLA does not necessarily apply to residential mortgages. However, even if you’re unsure about whether the Act applies to your circumstances, we would still encourage you to contact us for an initial discussion.
The MLA is not the only federal law explicitly designed to protect the financial interests of active duty service members. We look forward to discussing how any unfair practices may have breached your rights.
How Companies Commit MLA Violations
While we have touched on some of the effects of the MLA in terms of its protections, it is important for anyone involved in the military, from active duty members to those that form part of reserve components, to understand how lenders might breach the Act.
In knowing the behavior to look out for, you will understand when to submit consumer complaints and potentially consult a specialist attorney about legal action.
Interest Rates and Fees
As noted, the control of interest rates is integral to the MLA. Indeed, the interest rate on any applicable credit product is capped by law at 36%. Some lenders may attempt to circumvent this limitation by adding fees or other finance charges to the credit amount. However, the limit takes account of the borrower’s full financial liability to the lender, and the total cannot breach the 36% figure.
Mandatory Arbitration Clauses
If a service member takes out a financial product with a lender, the lending institution cannot include or enforce a mandatory arbitration clause in the arrangement. While these clauses are legal for the general public, they are designed to limit potential legal exposure for the lender, no matter how severely they break the law.
In short, these clauses prevent you from exercising your legal rights and pursuing the lender in a court of law. Including such a clause in a lending agreement can constitute an MLA violation, even if it is never exercised.
Incorrect Lending Structures
Financial products are often complex, sometimes by design. From overdrafts to closed-end credit, the terminology of any agreement typically favors the lender, even if it solely means that the borrower does not fully understand their rights.
The complexity can extend to the structure of loans. A finance company might try to package a loan or other line of credit in such a way that they appear, on the surface, to fall outside the boundaries of the Military Lending Act. This might mean altering the terms of the loan, adding ancillary products, or manipulating the perceived cost of credit.
This is the definition of deception. A skilled lawyer will help you unravel the arrangement to understand whether you can continue paying the intended amount or whether the lender has breached federal law.
Failure to Disclose Credit Conditions
Deception is frowned upon in the context of MLA violations, but omission can be just as serious and reasonably lead to enforcement actions. All pertinent information, such as interest rates and fees, must be supplied in writing before finalizing any credit agreement.
Failure to disclose this information or providing parts while obscuring others is sufficient cause to consult a lawyer. This does not only apply to a service member facing a financial crisis either. Even people that comfortably keep up with payments may have the opportunity to bring misselling to broader attention for the benefit of others.
What Bell Law LLC Can Do For You
It can be difficult to discover MLA violations, especially for those without specialist financial knowledge. However, it can be even more challenging to decide whether to consult a lawyer about any concerns.
We take great pride in providing service members with the benefit of our expertise and experience with the MLA. As well as supporting you throughout the specifics of your case, we thrive on the opportunity to bring attention to lenders that breach the Act, potentially protecting others in the process.
A Free Consultation to Discuss Your Case
At Bell Law, LLC, our legal experts fill in the gaps in our clients’ knowledge to determine whether they have a case that may be pursued in district court and beyond. We never want someone to accept that they have been treated unfairly or to decide that challenging a lender is not worth their time.
Likewise, we want our clients to be able to focus on the facts and understand that someone is standing by to support them. We certainly do not want them to dwell on whether a purchased vehicle could be taken away or worry about attorneys’ fees.
Instead, we want them to approach their case confidently and without obligation. That’s why every new attorney-client relationship at Bell Law begins with a free, confidential consultation whereby anyone with Military Lending Act concerns can apply context to their issues under federal and state laws.
Representation to Financial Institutions and Courtrooms
MLA disputes do not necessarily have to end up in court. It can be in the best interests of all involved to reach an agreement without the need for further legal intervention. Indeed, the first step and one of the key services offered by your attorney is to directly contact banks and other relevant institutions.
Our goal is always to get justice for our clients and ensure that an MLA breach does not negatively affect their financial situation. This might constitute a refund or compensation or could also extend to consequential and punitive damages, depending on the nature of the case.
That might entail discussions with the lender, numerous federal agencies, or the court system. Your lawyer will work actively and diligently on your behalf until the case reaches a conclusion, no matter what is required.
Communication with Regulators
MLA violations are often particularly severe, and it is highly likely that other parties beyond you, your representative, and the lender will want to know about them. This further supports the idea that reporting and potentially prosecuting a breach can help others in similar situations.
At the most basic level, your attorney can help report a suspected compliance breach to state regulators, such as state attorneys. In most cases, breaches are also reported on a federal level. Your attorney will support you or even act on your behalf when notifying several federal agencies, such as the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC).
Returning Clients to a Sound Financial Footing
Ultimately, we want our clients to return to financial normality, no matter the actions of a lender. It is impossible to determine the full scale of expenses and compensation from the outset, but a committed lawyer will ensure that clients remain informed at every step.
Bell Law representatives support clients by providing clear, transparent advice on everything from reasonable attorney fees to the actual damages that the other party might have to pay due to a court order.
The Implications for Lenders
Even though the proceeds of cases may not go exclusively to the plaintiff, they can become incredibly expensive for the offending party. In one example, the Consumer Financial Protection Bureau (CFPB) acted against an entity known as TitleMax. They were found to have breached military families’ rights in providing auto title loans.
This specific case touched upon various facets of the Military Lending Act. TitleMax was found to have exceeded the 36% interest rate limit by up to three times on occasion. Furthermore, they were successfully accused of altering clients’ personal information to make it appear that they did not qualify for MLA protections.
Ultimately, TMX Finance, the entity behind the TitleMax brand, was ordered to pay $5 million in consumer relief and a further $10 million in civil penalties.
Given that TitleMax claims to offer title loans of up to $10,000 and the case revolved exclusively around military personnel and their families, it illustrates the magnitude of MLA breaches and the financial implications for lenders that decided against following the rules.
Further Support From the Servicemembers Civil Relief Act
As mentioned, service members can benefit from a raft of protections over and above regular consumers. Another federal law covering military personnel is the Servicemembers Civil Relief Act, which complements the MLA. For example, while the MLA focuses heavily on lending and repayments, the SCRA extends to protection from eviction, interest rate reductions while deployed, and the ability to terminate home and property leases early and without penalty.
Crucially, the attorneys at Bell Law, LLC are equally well-versed in both sets of regulations and have worked on hundreds of relevant cases. That means that if you have concerns about a credit agreement but are unsure of specific breaches that may have occurred, your attorney is well-positioned to apply legal context to the situation.
Beyond that, we can draw upon significant expertise in all aspects of consumer protection. Service members are as entitled as anyone else to make use of the Truth in Lending Act, the Fair Credit Reporting Act, and many more.
Even if you are unsure of the legal basis for your complaint, we are here to take care of that for you and to provide the support you and your case need to succeed.
Call Bell Law for Tailored Advice Now
Whether you have indisputable proof or nothing more than vague concerns, your attorneys from Bell Law can help you make sense of a potential legal case. Lenders have to be extremely careful when dealing with military members, but this is exclusively advantageous and ensures that the law is on your side.
From the moment you contact us for an initial, free consultation, we will work with you directly to establish what the case involves and the actions we can take to put things right. No two clients are the same, and the same can be said of different cases. That’s why we combine extensive experience with modern knowledge, leaving no stone unturned when bringing finance companies that do not comply with regulations to justice.
You are our top priority in every case but always remember that taking action now can both restore your financial stability and help ensure that no other fellow service members fall victim to similar acts now and in the future.
It all starts with a phone call, and our team is standing by now to ensure the rights you have earned in serving your country are always respected by everyone, from the smallest local lenders to huge international banks.
Contact the Bell Law team now at 816-281-0649 to get started and take the first steps toward a more comfortable financial future.