When I started looking at the problem of predatory lending in America, the last place I would have thought to look is right outside every domestic military base. Boy was I wrong.
It turns out that the ~1.5 million active duty troops we have in this country are prime targets for predatory loans of all types. A nationwide lack of financial literacy, combined with a steady government paycheck, makes new recruits vulnerable to being taken advantage of by predatory lenders.
And as we know, financial standing impacts mission readiness. It is unbelievable that service members are unable to qualify as fit for deployment due to an issue that we already have viable solutions for.
There are, of course, some policy protections in place. The Military Lending Act (MLA), for example, is a Federal law enacted in 2006 that provides special protections for active duty service members, like capping interest rates on many loan products to 36%. As of 2015, the MLA now covers all forms of payday loans, vehicle title loans, refund anticipation loans, deposit advance loans, installment loans, unsecured open-end lines of credit and credit cards. But it is clear that policy is not always secure.
In 2018, the Trump Administration was reported to have plans to suspend routine examinations of lenders for violations of the Military Lending Act entirely.
Policy is also ineffective for dealing with a “whack-a-mole” industry like predatory lending, which just re-appears with a slightly nuanced but importantly unregulated product every time. For these reasons, policy alone is not sufficient in eliminating the problem.
With Buoy, I am interested in understanding how we can use products like Employer-Sponsored Loans, Earned Wage Access, and even zero-interest government-sponsored credit to give American service members access to affordable loans.
My question is, with an organization as enormous as the U.S. military, where do we start? Who is looking into this problem, and how do we get in touch with them to serve the mission of eliminating predatory lending for our nation’s military?
This is bigger than just getting rid of a few predatory check cashers skirting government regulation. This is a system that is failing the men and women putting their lives on the line for this country. Everyone deserve access to ethical and affordable credit, a financial safety net, credit building opportunities, financial literacy, and savings. The good news is that these products exist — we just need to spread the word. Let’s eliminate predatory lending in our lifetime, together.
Buoy Holdings is an Ithaca-based benefits consultant on a mission to end predatory lending in America. Schedule a meeting to learn more.
