Put an End to Predatory Fees From Payday Loans While Active Duty Safely

The MLA can apply to payday loans and other covered consumer credit extended to a covered borrower.

Under Department of Defense regulations, a covered borrower generally includes a qualifying servicemember or dependent at the time the borrower becomes obligated on the credit transaction. Covered military status can include certain active-duty servicemembers and members serving on qualifying Active Guard and Reserve duty.

That makes the loan date especially important.

For example, if you are retired or separated today but obtained the payday loan while you were serving under qualifying active-duty orders, the military status you had when the transaction occurred is an important fact to review.

Likewise, spouses and certain dependents may receive MLA protections when the legal definition of a covered borrower is satisfied.

What Is the 36% MAPR Limit?

The MLA generally prevents a creditor from imposing a Military Annual Percentage Rate, or MAPR, greater than 36% on covered consumer credit extended to a covered borrower.

MAPR and ordinary APR are not always the same calculation.

Depending on the transaction, MAPR can include charges such as finance charges, certain credit insurance costs, fees for credit-related products, and certain application or participation fees.

That distinction is important. A payday loan showing an APR above 36% does not, by itself, prove an MLA violation. A high or triple-digit APR may be a reason to examine the loan more closely, but the legal analysis generally requires determining the MAPR and reviewing the other facts surrounding the transaction.

What Facts Should You Look For?

If you obtained a payday loan while on active duty, consider gathering information about:

• the date the loan was opened;
• your military status or your spouse’s military status at that time;
• the lender, including whether the loan was from CashNetUSA;
• the APR shown on the agreement;
• fees and finance charges;
• renewals, refinances, rollovers, or repeat borrowing;
• automatic withdrawals or other repayment arrangements;
• arbitration language and other contract terms; and
• your loan agreement, bank statements, payment records, and military records.

You do not need to calculate MAPR or decide for yourself whether the MLA was violated. Those questions can depend on details that are not obvious from the face of the agreement.

Does the State Where I Got the Payday Loan Matter?

It can. The MLA provides federal protections, but state lending laws can provide additional protections. The federal regulation generally does not displace a state law merely because that state law gives a covered borrower greater protection.

For that reason, the state where the transaction occurred and the particular type of loan may also be relevant when reviewing payday loans obtained during active-duty service.

How Lenders Can Check Military Status Before Extending Credit

Federal rules give creditors ways to determine whether a consumer is a covered borrower under the MLA. A lender may check the Department of Defense database or use an indicator from a nationwide consumer reporting agency. When the creditor follows the regulatory timing and recordkeeping requirements, that determination can provide a safe harbor for the transaction.

The check generally must occur around the time the borrower applies, opens an account, or responds to a qualifying credit offer. For an active-duty payday borrower, the application date and lender records may help show how military status was evaluated before credit was extended.

. If the loan was from another payday lender, bring the lender information with you when discussing your situation.

What Remedies May Be Available for an MLA Violation?

If a covered payday loan violates the MLA, federal law provides remedies that can go beyond reducing interest or fees. A prohibited credit agreement may be void from the beginning. A person who violates the statute can face civil liability for actual damages, with at least $500 for each violation, as well as appropriate punitive, equitable, or declaratory relief.

In a successful action, the law allows recovery of court costs and reasonable attorney fees. These remedies are not automatic in every dispute. The facts, available defenses, and filing deadlines can affect what relief may be available to a particular borrower.

Don’t Let the Scammers Win

Ready to fight back? Tell Varnell & Warwick how CashNetUSA imposters targeted you, and let’s find out if a class action lawsuit can help recover your financial losses.