CUNA and the Defense Credit Union Council (DCUC) asked the Department of Defense (DOD) to remove a problematic question from its guidance on the Military Lending Act (MLA). While CUNA has additional concerns with the guidance, it seeks immediate withdrawal of Question and Answer 2 (QA2) due its seeming inconsistency with the text of the MLA regulation.
The DOD finalized changes to the MLA regulation in 2015, and issued an interpretive rule in 2016 and amendments to that rule in 2017.
“Aspects of the 2017 changes are problematic, including QA2, which addresses certain credit extended for the purchase of a motor vehicle or personal property,” reads the letter, signed by CUNA President/CEO Jim Nussle and DCUC President/CEO Anthony Hernandez. “Specifically, the revised answer to Question 2 indicates that a credit transaction that also finances a credit-related product or service—such as GAP or credit insurance—rather than a product or service expressly related to the motor vehicle or personal property would not qualify for exemption from the requirements of the MLA Regulation.”
The letter notes that CUNA and DCUC seek complete removal of QA2 from the interpretive rule, as amended in 2017 and as originally issued in 2016.
While the DOD considers CUNA and DCUC’s petition, the organizations urged the DOD to retain those aspects of the guidance that are helpful to creditors and consumers, and to remove only those that are likely to cause harm in the form of fewer financial choices and consumer confusion.