Military Lending Act

SettlementOne can help you verify whether an applicant is covered by the Military Lending Act (MLA). Just ask us how.

Congress passed the Military Lending Act (MLA) in 2006 with bipartisan support to provide specific protections for active duty service members, and their dependents, in consumer credit transactions. The Department of Defense (DOD) published a Final Rule in July 2015 to amend its regulation implementing the MLA, significantly expanding the scope of the existing protections. The new rule became effective on October 1, 2015, and compliance was required by October 3, 2016. Compliance, however, with the rules for credit cards is delayed until October 3, 2017.

Loans Covered under the MLA include:

  • Certain payday loans
  • Vehicle title loans
  • Tax Refund Anticipation Loans (RALs)
  • Deposit advance loans
  • Unsecured open-end lines of credit
  • Credit cards (Effective October 2017)

Who is a covered borrower?

A covered borrower is considered to be an individual serving on active duty in the military, or that individual’s spouse or dependents.

Under the new DOD rule, creditors are granted a safe harbor if they use the MLA database maintained by the DOD, or consumer reports from a nationwide consumer credit reporting agency to verify the borrower’s status and comply with the recordkeeping requirements. Creditors are allowed to rely on the initial “covered borrower” check for up to 60 days after a firm offer of credit is extended to the borrower.