July 29, 2021 — Letter

188 civil rights, community, consumer, faith, housing, labor, legal services, senior rights, small business, veterans organizations, and academics representing all 50 states and the District of Columbia write in strong support of the Veterans and Consumers Fair Credit Act, which would extend the Military Lending Act’s 36% interest rate cap on consumer loans to all Americans, including veterans, Gold Star Families, and unactivated reservists. The groups expressed support for the legislation and urged its swift passage in the 117th Congress to protect all consumers from predatory lending.

The Veterans and Consumers Fair Credit Act addresses the problems caused by unaffordable, predatory payday, auto-title, and similar forms of loans by:

● Reestablishing a simple, common sense limit on predatory lending by extending the Department of Defense’s 36% interest rate cap to all Americans. This would reestablish usury laws effective in virtually every state throughout most of the twentieth century.

● Preventing hidden fees and loopholes. The 36% rate cap is based on the Pentagon’s successful rules that include not just periodic interest but fees and add-ons. Loopholes in the Truth in Lending Act’s annual percentage rate have undermined cost transparency and emboldened evasions.

● Maintaining low industry compliance costs from compromise rules already in effect. Compliance costs for industry will be low because creditors already know how to comply for active-duty military and their families.

● Upholding stronger state protections. 36% is a relatively high rate and is appropriate only as an upper limit. States like Arkansas, Colorado, North Carolina, New Jersey, New York, and West Virginia already have strong interest rate caps lower than 36%, which will not be impacted because the bill does not preempt any provision of State law that provides greater protections to consumers. For larger loans, in particular, rates lower than 36% are appropriate.