Latest news with #MilitaryLendingAct
Yahoo
03-06-2025
- Business
- Yahoo
Trump's Shutdown Of Financial Watchdog Could Burden Military Families
The Trump administration's destruction of a consumer watchdog agency will end up hurting veterans and active members of the armed forces who are vulnerable to predatory banking and credit practices, according to a new report from public-interest groups. The Consumer Financial Protection Bureau has been investigating a growing number of complaints from veterans who say they were fleeced by banks and credit card companies in recent years. But the White House has tried to shut down the CFPB and defund it as the Trump administration pursues draconian cuts across the federal government. Those who served or are serving their country face unique risks that make them 'targets for scams and inflated prices,' including higher rates on auto loans than the general population, the report from the U.S. PIRG Education Fund and Frontier Group found. 'America's servicemembers, veterans and their families have benefited tremendously from the work of the CFPB,' the authors write, noting the agency has processed 400,000 complaints from those groups since 2011. 'To protect those who serve, policymakers must protect the CFPB.' Congress created the CFPB in the wake of the 2008 financial crisis, tasking it with protecting consumers from abuses by banks, credit unions, payday lenders and mortgage servicers, among others. Part of the agency's responsibilities is enforcing the Military Lending Act, which includes specific protections for active-duty service members and their families, such as caps on lending rates. Since 2011, the CFPB has recouped more than $350 million on behalf of servicemembers and veterans who said they were exploited, according to the report. Mike Litt, one of the report's co-authors, said the idea of protecting those who served their country has been baked into the CFPB's mission. When someone files a complaint against a bank or other firm, the CFPB invites them to note whether they have ties to the military. 'Service members and all Americans could pay a price with the dismantling of the CFPB,' Litt, the consumer campaign director at U.S. PIRG, told HuffPost. 'In the case of the service member complaints, what we found is nearly 1 in 4 complaints resulted in some kind of relief, whether monetary or non-monetary,' like someone's credit report getting fixed. Litt noted that the life circumstances of active-duty service members can make them more susceptible to predatory behavior. For instance, they tend to be young, they move a lot and they often have to manage their finances while abroad. Those between ages 18 and 24 are more likely to take out auto loans or credit cards than their civilian counterparts. The CFPB said last year that the number of complaints it received from the military community in 2023 was nearly double the number it received in 2021. A frequent grievance from service members was not receiving a 6% interest rate on auto loans they took out before going on active duty, as they were entitled to under law. Such complaints end up in the CFPB's public database, where Litt says the attention and risk of embarrassment often shames companies into fixing the problem. Their analysis found that 98.5% of service members' complaints received 'a timely response.' 'Because the database is public, companies have an incentive to at least respond,' he said. Republican lawmakers have bashed the CFPB for years, but the agency has never been so imperiled as it is under Trump. In February, Trump's acting CFPB director, White House Budget Director Russell Vought, locked the agency's staff out of their headquarters and ordered them to stop all their work. Trump said at the time that the CFPB was 'very important to get rid of.' A federal judge later blocked the administration's plan to lay off the vast majority of CFPB employees, but that case is under appeal. Meanwhile, the administration is moving ahead as if the courts will bless its plan to destroy the agency: Staffers recently received an email ordering them to clear out their offices in the coming days, Bloomberg Law reported. Last month, the agency's leadership also rescinded dozens of CFPB policy documents, suggesting a major pullback on enforcement even if the courts thwart Trump's mass layoffs. The move was applauded by the American Bankers Association, a leading lobby for the banking industry. Litt noted that the yanked documents included guidance for the public complaint database, which he said could be a 'first step' for shutting it down. 'The withdrawal of that guidance suggests that they are intending to or might hide the database from the public,' he said.
CNBC
27-05-2025
- Business
- CNBC
3 popular credit card benefits for active military personnel
If you're an active service member, you're entitled to some financial protections. This is thanks to the Servicemembers Civil Relief Act (SCRA) and the Military Lending Act (MLA), both of which address the consumer debt that military members and their families may carry. These laws provide financial safeguarding like interest rate caps, protections against mortgage foreclosures and from eviction, ability to terminate leases, no loan prepayment penalties and credit card relief. Below, CNBC Select dives deeper into active-duty military members' financial protections when it comes to their credit cards. One of the most valuable benefits is the cap on interest rates for many different types of loans, including credit cards. The interest rate on debt covered by the SCRA is capped at 6%, while the rate on interest and fees under the MLA is capped at 36% in order to protect service members from predatory lending practices. Some issuers openly offer waived fees on credit card accounts for active military personnel, and others may still offer them, you just have to ask. Being able to waive an annual fee of potentially hundreds of dollars, or even avoiding a late payment charge, can add up both in the moment and over time. All the available card benefits stay the same, so you can get premium credit card perks for no annual fees. Often, the perks that the active service member receives will also be available to their spouse. Sometimes this will be due to the letter of the law, other times as a courtesy extended by a financial institution. Many banks will have special phone lines or email addresses for questions military members might have about benefits so reach out and ask. Some issuers offer additional benefits that go above and beyond those required by law. With Capital One, customers eligible for the SCRA will receive an interest rate cap of 4% and no annual fees or other fees on their Capital One credit card accounts. These benefits apply to the spouses/dependents of eligible service members and that coverage extends for one year after the end of their active-duty service. Chase offers SCRA benefits, including waived fees on all Chase credit cards and 4% APR on eligible balances during active duty and one year afterward. Other issuers have indicated that they provide relief that meets or exceeds the requirements. Since each issuer may handle military benefits differently, it's always best to reach out directly with any questions or if you're looking for specific details. If you're eligible for any of these active military benefits, it's worth reaching out to your bank to see how you could save. Taking advantage of the interest rate cap you have on credit card debt can save you a large amount of money, especially if you qualify for the 6% interest rate cap. If you're paying $250 a month on $5,000 in credit card debt with 25% interest, it will still take you over two years and more than $1,500 in interest payments to pay it off. With a 6% interest rate cap, those same $250 monthly payments eliminate your debt in under two years with just under $300 worth of interest payments, saving you over $1,200. Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent Debt Relief has resolved over $19 billion in outstanding debts since 2002. It offers free credit card debt relief in 2011, Accredited Debt Relief has helped clients resolve over $1 billion in debt. With many credit card issuers waiving fees for active military service members, this can lead to some pretty great value from the higher-tier cards. With Chase waiving their fees on all its cards, you could get the Chase Sapphire Reserve® (see rates and fees) without its typical $550 annual fee, giving you access to a $300 annual travel credit, entry into over 1,300 airport lounges and more. On Chase's site On Chase's site Points are worth 50% more when you redeem them for travel booked through Chase Travel℠. Excellent740–850 20.24% - 28.74% variable $550 Earn 60,000 bonus points See rates and fees. Terms apply. Member FDIC. Read our Chase Sapphire Reserve® review. The Chase Sapphire Reserve® is a standout premium credit card with plenty of luxury perks and statement credits to justify its annual fee. Either $5 or 5% of the amount of each balance transfer, whichever is greater Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.$0With over 4,700 branches, Chase has the largest branch network in the U.S. plus access to more than 15,000 ATMs. JPMorgan Chase Bank, N.A. Member FDIC Terms apply.$0Bank from anywhere with access to more than 15,000 Chase ATMs, more than 4,700 Chase branches, the Chase Mobile® app and JPMorgan Chase Bank, N.A. Member FDIC Terms apply. One aspect of some of these military benefits that can get overlooked is whether they apply to spouses or dependents, as this can be a nice addition. With Capital One extending its credit card benefits to the spouses and dependents of service members, they could also qualify for a premium travel card like the Capital One Venture X Rewards Credit Card without paying the $395 annual fee. The card offers a $120 statement credit for either Global Entry or TSA PreCheck® and a 10,000-mile bonus on each account anniversary. You can add up to four authorized users to your account no fee and they can each receive their own Priority Pass airport lounge membership (enrollment required). Excellent740–850 19.99% - 29.24% variable APR $395 Earn 75,000 bonus miles Terms apply. Read our Capital One Venture X Rewards Credit Card review. The Capital One Venture X Rewards Credit Card is a premium credit card with a myriad of benefits and a lower annual fee than other high-end cards with similar features.$0 at the Transfer APR, 4% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you $0 In addition to the perks required by law, some issuers will also provide additional benefits to active military members such as waived fees or reduced interest periods. Chase and Capital One are two banks that waive certain credit card fees for active military members. Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here. At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every credit card article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit card products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Yahoo
27-05-2025
- Business
- Yahoo
Alaska Legislature votes to limit high interest rates and fees for payday loan lenders
A payday advance neon sign is seen in this undated photo. (Photo) On the 120th and last day of Alaska's annual legislative session, the state House passed a bill that would curb high interest rates and fees for payday loans of $25,000 or less. The Senate passed Senate Bill 35 in late April, and the House passed the bill Tuesday by a vote of 24 to 16. The bill now is set to be transmitted to Gov. Mike Dunleavy's desk. If the bill becomes law, it would remove payday lenders from an exemption in state lending laws and cap interest rates and fees at an annual percentage rate, or APR, of 36% for loans of $25,000 or less. Anchorage Democrats Sen. Forrest Dunbar and Rep. Ted Eischeid sponsored the legislation in the Senate and House. 'This bill closes a harmful special exemption that has allowed lenders to charge outrageous interest rates on small loans,' Dunbar said in a statement after the vote. 'With this change, Alaskans will have the same consumer protections that apply to other loans, reducing the risk of debt traps and keeping more money in our communities.' An estimated 15,000 Alaskans take out a payday loan each year, according to research by the nonprofit Alaska Public Interest Research Group. Payday loans are short-term, high-cost loans, often for small amounts that are meant to be paid back on the borrower's next pay day. Interest rates can range from 194% to 521%, and advocates of the bill said it's a consumer protection measure that could help borrowers avoid becoming trapped in a cycle of debt and repayment of more payday loans. 'Instead of fixing a problem, this exception to the Small Loans Act has been more like giving a thirsty person a glass of salt water,' Eischeid said on the House floor ahead of the vote. 'It doesn't help in the long term.' Eischeid pointed to the Military Lending Act, which already established a cap at 36% total annual percentage rate for loans to military service personnel. 'Veterans, on the other hand, do not have similar protections and are targeted by payday lenders and are vulnerable to these excessive fees and interests,' Eischeid said. 'We should provide safeguards in the marketplace, so Alaskans aren't the victims. It's time to remove the loophole to payday loans and protect Alaskan families from predatory lending practices.' Rep. Jamie Allard, R-Eagle River, opposed the bill. 'This is government overreach. Individuals should be able to take loans as they wish, at whatever percentage rate. And frankly, there's credit cards that have a higher interest rate than what we're doing right now, today, and I don't see that in this bill,' she said. High interest loans can present dilemmas regarding governance and oversight. One day after the Legislature passed the bill, the Anchorage Daily News and ProPublica published an investigation spotlighting a tribal lending business, Minto Money, based in the small community of Minto outside Fairbanks. The story details how online lending at high interest rates is highly lucrative, but highlights ethical concerns, community divisions and questions around who benefits. While the company does not lend to people in Alaska, the investigation found, there is an effort to attract other Alaska villages to the lending industry. 'Tribes in America are in demand as business partners because they can claim that, as sovereign entities, their operations are exempt from state interest rate caps,' the authors wrote. 'Critics of such lending partnerships have called them 'rent-a-tribe.'' Dunbar said the legislation was developed before he became aware of the lender. He responded to the story's findings in an email on Friday. 'I applaud the investigative coverage of the ADN/ProPublica on a particular payday lender who appears to have engaged in the kind of practices that highlight why reform was necessary. Without clear limits, too many Alaskans have faced a lack of safe borrowing options and have often been left with only predatory choices.' He said it's notable that every registered payday lending company that operates in Alaska is based outside of the state, and the vast majority of these transactions are done online. The bill includes a provision to prevent companies from evading state interest-rate caps. 'I am glad that the bill included an anti-evasion clause and provisions to limit 'rent-a-bank' practices,' Dunbar said. Once transmitted to Dunleavy, he has 20 days excluding Sundays to sign the bill, veto it or allow it to become law without his signature. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
06-03-2025
- Business
- Yahoo
Your government slashed consumer protections. Now what?
In the same way people don't think about their plumbing until a deathly stench rises from their shower drain, most of us have gotten used to the safeguards afforded by the federal Consumer Financial Protection Bureau — we've got backup if there's a problem. Among its service to American consumers: returning more than $21 billion to 205 million people; saving more than $5 billion by capping bank fees; fielding more than 6.8 million complaints about medical debt, student loan repayment and credit reporting; returning $183 million to veterans and service members for violations of the Military Lending Act; and removing $49 billion in medical collections from credit reports (anything under $500 cannot be included). Higher credit scores mean better rates and easier approvals on loans, credit cards and rentals. The Trump administration has frozen the work of the CFPB (though there have been conflicting messages from the president himself), but only Congress can officially shut it down. It is funded by the nonpartisan Federal Reserve board to insulate it from politically driven fluctuations, and its fate hinges on a lawsuit brought by the National Employees Treasury Union that covers CFPB staff. A coalition of 23 state attorneys general submitted an amicus brief, arguing that shutting the bureau would cause catastrophic harm to consumers if oversight is left to the states. 'The Trump Administration's takeover of the CFPB is an effort to destroy the agency responsible for overseeing the mortgage markets, stopping predatory debt collectors, and preventing American families from being exploited by big banks and payday lenders,' said California Attorney General Rob Bonta in a statement. 'From sharing complaints and trend data, to providing training, and partnering on joint investigations and litigations, the loss of CFPB's partnership has devastating and deep implications for California and households across the nation." The Bureau was created in the wake of the 2008 financial meltdown after fiscal institutions extended too much risky credit to folks who were unable to repay and went wild with mortgage rates and fees, which sank real estate markets and sent people into stratospheric amounts of debt. Signed into law in 2010 and enacted in 2011 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has since established national bulwarks for consumers against high fees for credit cards, payday loans and banking transactions and overdrafts. But actually, the CFPB was a great investment that put money back in people's pockets. Since its inception, taxpayers spent $7.6 billion on the CFPB, but the Bureau returned $21 billion to consumers — about $2.76 for each dollar spent, said Mallory SoRelle, an assistant professor at Duke University's Sanford School of Public Policy and the author of Democracy Declined: The Failed Politics of Consumer Financial Protection. 'But those numbers don't account for the money that consumers save from the agency rulemaking, complaint handling, educational activities, or other supervisory activities, so it would be a conservative estimate," she said. "For example, the agency's own estimates suggest that the 2024 overdraft rule alone could save consumers $5 billion each year — significantly increasing the return on investment from just one single rule. Even if the actual savings ended up being lower, that is a huge potential return.' 'The agency has returned over $20 billion to consumers since its founding — protecting Americans from junk fees, medical debt, and predatory lending. President Trump campaigned on capping credit card interest rates at 10% and lowering costs for Americans. [Trump] needs a strong CFPB and a strong CFPB Director to do that. But if President Trump and Republicans decide to cower to Wall Street billionaires and destroy the agency, they will have a fight on their hands,' Sen. Elizabeth Warren (D-Mass.) said in a statement. Warren was one of the CFPB's original champions. SoRelle said that while there are agencies that have consumer divisions, their primary mission is to prioritize the profitability and soundness of financial institutions — such as the FDIC and the Federal Reserve — not the people they serve. The 'low bar' of protections, in fact, helped usher in the financial crisis of 2008. 'There were these existing agencies, but they were adopting pretty weak consumer financial protections,' SoRelle said, 'They weren't really as engaged with some of the enforcement actions that were needed to keep on top of those protections.' Consumers can also wield power by choosing financial products, especially through credit unions, that are more consumer friendly. And read the fine print, carefully. 'I don't think it's fair to say that all of these financial institutions are out to defraud people, but it's also true that there are a lot of financial institutions that have historically engaged in practices that break the law, that engaged in discriminatory practices or unfair practices, or are simply focused on profits and are charging fees that are disproportionately hard for certain types of people to pay for,' SoRelle said. It's expensive to be poor. For many, the problem isn't so much lack of financial knowledge as having poor credit and fewer options, falling into murderous interest rates and deeper debt via payday loans and overdraft fees. Financial payment services are ramping up — especially peer-to-peer payments across social media and 'buy now, pay later' services — without much regulation. 'Nobody's really quite clear who has oversight over them,' SoRelle said. 'We're not really sure if some of these products count as credit or if maybe there's something else.' Without the CFPB, new platforms and services may escape a regulatory eye. Some states, however, may step in, depending on how seriously they take consumer protection, creating a patchwork of regulations across the country. 'If you live in a state where the government is deciding to regulate these more stringently, you are going to have more protection,' SoRelle said. 'For now, the complaint database of the CFPB is still available and people should file complaints there. The CFPB historically has done a really good job of trying to help consumers navigate those complaints,' SoRelle said. She advised folks to also leverage their state's attorney general's office and any other consumer protection apparatus available. SoRelle urged people to reach out to their elected officials to support the full restoration of the CFPB. 'If you value the work that the CFPB does, and you want your pocketbook protected, then you've got to show up for it the way that it would show up for you. And that means contacting your elected officials to tell them to stop what's happening,' she said.
Yahoo
20-02-2025
- Business
- Yahoo
Democratic lawmakers warn axing Consumer Financial Protection Bureau will leave troops vulnerable to fraud and scams
Shuttering the Consumer Financial Protection Bureau will leave service members who rely on the agency's accountability initiatives less guarded from career-ending scams and financial crimes, Sen. Tammy Duckworth and other Democratic lawmakers said in a letter Thursday to the bureau's new acting head. Three members of the U.S. Senate Committee on Veterans' Affairs urged Office of Management and Budget Director Russell Vought to restart CFPB operations nearly two weeks after he issued a dozen directives to employees, effectively cutting the bureau off at the knees. 'These short-sighted actions leave service members and Veterans — who are among the likeliest group to be targeted for financial crimes — vulnerable to fraud and abuse,' read the letter, which was sent to Vought on Thursday morning and shared first with NBC News. The letter was signed by Duckworth, D-Ill.; Sen. Richard Blumenthal, D-Conn.; and Sen. Mazie Hirono, D-Hawaii. In an interview with NBC News, Duckworth said young service members are targeted by bad actors, such as payday lenders and disreputable car dealers, particularly because military members' wages can be garnished. Young service members, she added, are also more vulnerable because they are often separated from their support network and may not be wise to such schemes. 'Once you enlist in the military, they know you're going to have that job for four years or six years, and then they can just garner your salary,' Duckworth said. 'They are the preferred targets.' Since its inception in 2011, the CFPB said its enforcement actions in 42 cases involving harm to service members and veterans have delivered $183 million in redress to victims. The bureau is responsible for taking judicial actions when federal laws meant to protect service members — including the Military Lending Act, designed to deter predatory lending practices — are violated. The bureau also participates in the Veteran Scam and Fraud Evasion Task Force, which then-President Joe Biden launched in 2023 to crack down on fraud and scams perpetrated against veterans, service members and their families. The safeguards are important, the lawmakers said, because identity theft or bankruptcy can mean a loss of a security clearance or the end of a service member's career. They're also necessary, the group said, as fraud and scams cost the military community millions of dollars each year. The Federal Trade Commission said it received 163,000 fraud reports from veterans and nearly 13,000 fraud reports from active-duty service members from 2015 to 2019. In 2022, frauds and scams cost the military community more than $414 million, an increase of more than 50% from the previous year, according to the FTC. That grew to more than $470 million in 2023, the latest year with available FTC data. 'I think that you're going to see these predators redouble their efforts,' Duckworth told NBC News. 'We don't have time to waste right now.' Ending protections, Duckworth and the other legislators wrote, will lead to a "direct national security risk." Among Vought's directives to employees on Feb. 8, he ordered them to immediately 'cease all supervision and examination activity,' 'cease all stakeholder engagement,' pause all pending investigations, not issue any public communications and pause 'enforcement actions,' NBC News previously reported. In a post on X that day, Vought said he had notified the Federal Reserve, which handles U.S. monetary policy, that 'CFPB will not be taking its next draw of unappropriated funding because it is not 'reasonably necessary' to carry out its duties.' 'The Bureau's current balance of $711.6 million is in fact excessive in the current fiscal environment,' Vought wrote. 'This spigot, long contributing to CFPB's unaccountability, is now being turned off.' Last week, a U.S. district judge ruled that Vought could not yet terminate any CFPB employee without cause, tamper with records or reduce the amount of money available to the CFPB. The order came after the National Treasury Employees Union, the CFPB Employee Association and other groups sued the CFPB and Vought. The judge said the order holds until the resolution of the plaintiffs' motion for a temporary restraining order. In their letter, the Democratic lawmakers called Vought's actions 'reckless obstruction' and asked him to reconsider. 'We know predatory actors will always be looking for opportunities to scam our Veterans, service members and their families from the benefits they have earned and deserve,' they wrote, 'and your stop-work order is a green light directing them to their next projects.' This article was originally published on
