Washington, DC–(ENEWSPF)–July 21, 2015. Statement of Robert Weissman, President, Public Citizen:
Public Citizen applauds the U.S. Department of Defense, working in tandem with the U.S. Consumer Financial Protection Bureau, for taking swift and strong action to protect military service members from predatory lenders by completing new rules intended to fulfill the promise of the Military Lending Act. These new rules will help thousands of active service members and their families by ensuring that unscrupulous lenders cannot exploit loopholes to take advantage of those serving in the military and entrap them in a cycle of debt.
Importantly, the new rules prohibit the use of forced arbitration provisions in the fine print of high-cost consumer credit products. Forced arbitration measures prevent consumers from seeking redress for abuse in court, forcing them to bring cases before industry-friendly arbitrators. Most importantly, these measures commonly prevent consumers from joining together to bring class actions. For relatively small-dollar abuses, this leaves consumers with no effective redress – meaning that lenders have an effective license to steal.
Not only are today’s new rules the right thing to do to prevent the exploitation of our nation’s service members, but the Defense Department has determined that they are crucial to maintaining our military force’s readiness. It is a sign of just how indebted our Congress is to corporate interests that, despite the implications for military readiness, these rules had to survive a gauntlet of attacks by Republicans in the U.S. House on behalf of their predatory lending industry benefactors.
Of course, it is not only service members who deserve protection from predatory practices. The protections included in today’s new rules should be afforded to all Americans. We need a nationwide cap on interest rates modeled after the one included in these new rules, as well as blanket application of the other protections in the rule. And it is imperative that the Consumer Financial Protection Bureau proceed expeditiously with its plans to issue a rule prohibiting forced arbitration provisions in all consumer financial contracts.