Pawnbrokers filed a lawsuit against the U.S. Department of Defense (DOD) last week regarding changes to the Military Lending Act (MLA). Huntco Pawn Holdings, LLC and the National Pawnbrokers Association are seeking injunctive and declaratory relief for pawnbrokers.
The complaint alleges that there are profound differences between pawn and other forms of consumer credit and states that the Consumer Financial Protection Bureau, which is more expert than the DOD on the subject of consumer lending, has issued a proposed rule which exempts pawn from requirements that apply to other consumer loans in its proposal on payday, vehicle title, and certain high-cost installment loans.
The changes to the MLA were finalized last year, adding a number of protections on loans extended to covered military servicemembers. Covered loans to borrowers cannot exceed a 36% military annual percentage rate.
CUNA has raised numerous concerns about the MLA changes to the DOD, and at the DOD’s request, submitted MLA guidance language suggestions. CUNA is also concerned that the DOD has yet to release the compliance guidance, with the compliance deadline set for October.
In the pawnbrokers' lawsuit, the plaintiffs assert that the DOD violated:
The plaintiffs are seeking: