Compliance: MLA back-to-basics, updated spreadsheet
CUNA has updated its Military Lending Act (MLA) credit card fee spreadsheet for the first quarter of 2019. The updated resource can be found in the CUNA Compliance Community’s “Compliance Resources” tab, and under the “Resources” tab in CUNA’s MLA e-Guide.
CUNA’s CompBlog also features a “back to basics” entry for the MLA, examining what loans are covered and what loans are exempt from the rule, as well as information on who is a covered borrower.
Under a Safe Harbor in the MLA rule, a credit union may exclude a bona fide credit card fee from the MAPR if the fee is considered “reasonable,” meaning it must be less than or equal to the average fee for the same or similar product charged by five separate card issuers, that each have at least $3 billion in outstanding credit card balances at any time during the three-year period preceding the time the average is determined.
Currently, there are approximately 20 large card issuers that meet this requirement, and together they have about 260 card agreements in the CFPB’s Card Agreement Database, of which most are Private Label cards. Only about 85 of the agreements would appear to be useful for MLA purposes.
The exclusion generally applies to finance charges under Reg. Z such as cash advance fees, foreign transaction fees, balance transfer fees, transaction fees for purchases and minimum interest charges. Other charges, which are not finance charges under Reg. Z, such as a late fee or an over-limit fee are not included in the calculation of the MAPR anyway, so the exclusion would not apply to such fees.
The exclusion does not apply to fees or premiums for credit insurance, fees for a debt cancellation contract, fees for a debt suspension agreement, or to fees for a credit related ancillary product. Those fees must be included in the calculation of the MAPR.