August 16, 2013
By Charles Zuckerman
Military families are often at a heightened risk for financial scams. Unscrupulous lenders and fraudsters regularly target service members because they are younger and sometimes are more in need of financial assistance. As the Department of Defense moves to revise the landmark 2007 Military Lending Act, more than 20 senators wrote to military officials in an effort to encourage them to expand the protections in the bill, Military Times reported.
When legislators passed the bill six years ago, it included a number of substantial protections. For instance, it set an interest rate cap of 36 percent while also making it illegal to secure loans through checks. However, there were some gaps in the protections, especially because the definition of consumer credit was relatively lax and the DOD limited the cap rate to just three specific products. Senators have urged the Pentagon to revise its implementation of regulations so that scammers can't take advantage of loop holes.
"Due to the narrow definition of consumer credit, certain lenders are offering predatory loan products to service members at exorbitant triple-digit effective interest rates and loan products that do not include the additional protections envisioned by the law," the senators wrote in an Aug. 1 letter.
The letter came just before some government officials warned about one scam in particular that targets military families. Ohio Attorney General recently pointed out several of the most pervasive scams, including one that targets family members who have a loved one serving overseas. The fraudsters in question ask for money so the target's spouse can be sent home on early leave, according to The Associated Press.