The CFPB highlights the abuses of the military assignment system

On June 2, the CFPB job a blog post highlighting abuses within the military award system with respect to automatic recurring military payments. According to the Bureau, the attribution system was put in place to help service members make payments directly from their paychecks, especially when deployed away from home. However, according to the CFPB, some lenders have abused the attribution system, with some lenders using the system “as a means of prioritizing that lender’s loan repayment over payments of other military expenses.” The Bureau noted that the military has other options for automatic payments that are generally free and provide more legal protections than the award system, and reiterated that the Department of Defense (DoD) has made significant changes. in 2014 that prohibited new allotments to buy, lease, or lease personal property like cars, furniture, and electronics, and “expanded the allotment prohibition in the Military Loans Act (MLA) to include a wider range of credit products, like installment loans, that cannot be repaid by attribution” (MLA Revised Regulations covered by InfoBytes here).

Through consumer complaints and the work of the agency’s Office of Service Member Affairs, the Office said it continues to hear of significant concerns in this space, including that some lenders require service members repay by attribution (a violation of the MLA), and other lenders are partnering with attribution processing banks to create “attribution-funded savings accounts” for service members to evade the protections of the DoD. The blog post highlighted the Office’s commitment to protecting service members from abuse and provided information for service members on filing complaints if they believe they have been treated unfairly by a company through the military adjudication system. .

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