Interpretive Rule Issued for Military Lending Act

• August 26, 2016
• CLA Regulatory Compliance Team

On August 26, 2016, the Department of Defense (DOD) issued an Interpretive Rule on the Military Lending Act (MLA).

The MLA limits the military annual percentage rate (MAPR) that a creditor may charge to a maximum of 36 percent and requires specific disclosures. On July 22, 2015, DOD extended the protections of the MLA to a broader range of closed-end and open-end credit products. The interpretive rule provides guidance on questions DOD received regarding the July 2015 Final Rule.

Questions answered by the interpretive rule include:

• What types of overdraft products are within the scope of “consumer credit”?
• Are creditors permitted to waive fees or periodic charges at the end of a billing cycle or earlier for open-end credit, in order to prevent a borrower from being assessed a MAPR in excess of 36 percent during that billing cycle?
• If a creditor chooses to provide the information that is required to be provided orally by providing a toll-free telephone number, when must the information be available to the borrower?
• In circumstances where Regulation Z allows a creditor to provide disclosures after the borrower has become obligated on a transaction (as in the case of purchase orders or requests for credit made by mail, telephone, or fax), does the MLA provide for similarly delayed disclosure?

The interpretive rule answers a total of 19 MLA final rule questions.

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