Association of Military Banks of America

CFPB Cautions Military Lenders Against Illegal Military Allotment Practices

The CFPB put out a press release today cautioning lenders against illegal allotment practices.  You may remember the new rule for servicemembers that limits the type of allotments they can set up that was published by DFAS back in November 2014 and went into effect on 1 January 2015.  This press release from the CFPB is important, even though the burden of knowledge falls on the Servicemember, the CFPB is concerned about advertisement from lenders that suggest the use of allotments to pay for consumer products.

From the CFPB press release:

CONSUMER FINANCIAL PROTECTION BUREAU CAUTIONS MILITARY LENDERS AGAINST ILLEGAL MILITARY ALLOTMENT PRACTICES
Bureau Puts Companies On Notice After Defense Department Rules Take Effect 

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) sent letters this month to several companies that sell retail goods to military servicemembers, advising them to review their websites and other advertising for potentially misleading marketing and to review other 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. The CFPB is concerned that companies that are still advertising repayment by way of military allotment may potentially be violating federal consumer financial protection laws.   

Read the full press release.