November 2015

A snapshot of 

servicemember 

complaints

Products impacted by the new Military Lending Act rule
1 SNAPSHOT OF SERVICEMEMBER COMPLAINTS 

As of November 2015, the Consumer Financial Protection Bureau had received almost 2,500 

complaints from servicemembers, veterans, and their dependents about high-cost consumer 

credit. Consumers submitted these complaints to the CFPB under two different product 

categories: under our “payday” loan complaint category, or under our “debt collection”

complaint category with the “payday” sub-product.1

FIGURE 1: TOTAL COMPLAINTS SUBMITTED BY SERVICEMEMBERS, VETERANS, AND THEIR 

DEPENDENTS (BY PRODUCT) 

1%

1%

1%

2%

3%

5%

6%

6%

10%

16%

50%

Other financial service

Money Transfer

Other

Student loan

Payday loan

Credit card

Consumer loan

Bank account or service

Credit reporting

Mortgage

Debt collection

FIGURE 2: DEBT COLLECTION COMPLAINTS SUBMITTED BY SERVICEMEMBERS, VETERANS, AND THEIR 

DEPENDENTS (BY SUB-PRODUCT) 

 

3%

4%

5%

6%

19%

28%

34%

Non-federal student loan

Federal student loan

Mortgage

Auto

Payday loan

Medical

Credit card

1

 Consumers submitted these complaints to the CFPB under two different product categories: as “payday” loan 

complaints and as “debt collection” complaints related to payday loans. The Bureau began accepting “debt collection”

complaints in July 2013 and “payday” loan complaints in November 2013. This figure only includes complaints 

where consumers were able to specifically identify the type of debt being collected, thus it excludes complaints 

where the consumer selected “Other” or “I do not know” in response to the question, “What type of debt is this?”
2 SNAPSHOT OF SERVICEMEMBER COMPLAINTS 

While the “payday” loan complaint category represents 3 percent of total servicemember 

complaints, the “payday” loan sub-product category represents 19 percent of the complaints 

submitted by military consumers under the “debt collection” complaint category. “Debt 

collection” is the largest complaint category for military consumers, as well as for all consumer 

complaints. Within the “debt collection” category, the number of complaints stemming from the 

“payday” sub-product is very high: more than auto loans, mortgages, and student loans 

combined. Given the overall size of the financial marketplace for high-cost consumer credit 

products, the number of debt collection complaints servicemembers, veterans and their 

dependents submitted stemming from these loans is high. This suggests, in part, that military 

consumers struggle more with repayment of high-cost credit products as compared to other 

types of credit. The good news is that recent updates from the Department of Defense to the 

regulation implementing the Military Lending Act (MLA) should generally help 

servicemembers and their families avoid this type of high-cost debt going forward. 

The chart below contains examples of high-cost credit products received by active duty 

servicemembers prior to the Department of Defense’s July 2015 revision of the regulation 

implementing the MLA. These servicemembers, who were struggling to pay back their loans, 

reached out to the CFPB and submitted complaints because they believed they were protected by 

the MLA’s limitation on the cost of credit. Although these loans carried high costs, they did not 

fall under the MLA under the prior implementing regulation: 

Loan amount APR Loan term Total finance charge

$2,600 139% 48 months $11,500

$1,000 234% 24 months $3,819

$1,000 500% 5.5 months $1,313

One military consumer stated his frustration: “While serving [in the military], I fell 

behind on money. I applied for a [loan] with [company]. After being charged over $200 every 

two weeks and my balance not going down I did some research and found out I have a 

153.01% interest rate. When I contacted them about this being illegal for [servicemembers] 

they blew me off. Having this is ruining my credit score and I cannot keep up.”
3 SNAPSHOT OF SERVICEMEMBER COMPLAINTS

Changes to the Military Lending Act

Congress enacted the MLA to protect servicemembers from loans with a military annual 

percentage rate over 36 percent, with some exceptions. The initial rule implementing the MLA 

applied its protections to a very limited set of products, including narrowly-defined payday 

loans, auto title loans, and tax refund anticipation loans. In July 2015, the Department of 

Defense changed the implementing regulation so that more products are covered by the law’s 

protections. 

Here’s what to know about the new rule, which became effective on October 1, 2015: 

 Lenders will be expected to comply with the new rule on October 3, 2016 for all covered 

products other than credit cards. The compliance date for credit cards is October 3, 2017. 

 For loans covered by the MLA, the all-in cost of credit will be limited to an annual rate 

of 36 percent (referred to as the Military Annual Percentage Rate or “MAPR”). 

Included in the MAPR are costs like finance charges, credit insurance premiums or fees, 

and additional fees associated with credit such as application or participation fees, with 

some exceptions. 

 The new rule extends the protections of the MLA to a broader range of consumer credit 

products than previously covered. The MAPR cap and other MLA protections will now 

apply to all consumer credit subject to disclosure under the Truth in Lending Act, except 

for certain statutory exceptions. These exceptions include residential mortgages and 

certain secured loans for the purchase of personal goods and vehicles and that are 

secured by those items. 

 For credit cards, there is a limited exclusion for “bona fide fees” when calculating the 

MAPR. This means that for credit cards some common fees, such as cash advance fees 

and foreign transaction fees, generally need not be included in the overall price limit.