Last week the Obama administration announced that the Department of Defense (DoD) would be increasing protections for service members from predatory loans.
Military members have long been targets for payday and predatory lenders. For this reason Congress passed the Military Lending Act (MLA) in 2006 that capped percentage rates at 36 percent on payday and auto title loans, and didn't allow the loans to be automatically renewed for military service members.
These protections proved difficult as payday, auto title, and other predatory lenders were changing terms and other aspects of loans to avoid the MLA's clamp down.
According to a recent study for Congress the DoD stated:
However, specific definitions of problematic credit no longer appear to function well in the current marketplace.
For instance the old language in the act limited the percentage rate on loans under $2000 and loans 91 days or fewer, so many payday lenders restructured offerings to longer than 91 days, or making them "lines of credit," which allowed them to maintain large percentage rates.