news.cuna.org/articles/106963-cfpb-warns-retailers-about-military-allotment-payments

CFPB warns retailers about military allotment payments

July 27, 2015

WASHINGTON (7/27/15)--The Consumer Financial Protection Bureau (CFPB) is advising several retailers who sell goods to military servicemembers to review their websites and other advertising for potentially misleading marketing and to review practices related to payment by military allotment.

Active-duty servicemembers are not permitted to use allotments to pay for personal property such as vehicles, appliances and consumer electronics, said CFPB in letters sent earlier this month to several companies.

Paying by allotment is prohibited by the Department of Defense regulations that went into effect in January. The practice could violate the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibition against unfair, deceptive or abusive acts or practices in consumer financial products or services, CFPB said.

“Companies that are still advertising repayment via military allotment may be violating the law,” said CFPB Director Richard Cordray. “Companies should give consumers accurate and reliable information so they can make the best decisions for their own financial situations.”

The military discretionary allotment system allows servicemembers to automatically direct part of their paycheck to financial institutions or people they choose. However, military personnel using the allotment system instead of other automatic payment options such as automated clearing house (ACH) can lose certain legal protections, said CFPB.

Its letters are not considered a finding or ruling that recipients have actually violated the law, CFPB cautioned.