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Attorneys general request expansion of rules in Military Lending Act
PENSACOLA -- Seven years after congress banned payday loan companies from charging extremely high interest rates to troops, critics say predatory lending is still a big problem.
Now attorneys general in 13 states including Florida are urging the Pentagon to better protect members of the military. Consumer Credit Counseling Services here in downtown Pensacola helps about 20 to 30 service members a month at this office alone.
Terry Daniel, office manager said, "I think of the payday loans and they can be 200 to 300 percent."
Terry Daniel, the office manager at Consumer Counseling Service, says she sees a lot of troops getting in over their heads.
"Once you get it, you can't ever get it paid off. It just seems to go on and on with just paying the interest,” said Daniel.
Attorneys general from 13 states have sent a letter to the Secretary of Defense. They're asking the Pentagon to add rules under the Military Lending Act, which passed in 2006, to make it more effective.
They say the rules would ensure payday and car title loans given to troops would be subject to a 36 percent interest rate cap and other protections.
Veteran Derrick Cook said, "They're easy targets because they know that they're gonna get their money."
Veterans we spoke to are glad the attorneys general have taken action.
Brandon Williams, veteran said, "I see it being a big problem because you can't not have your finances in order in the military. That's gonna look very badly on you."
The new rules being requested by the attorneys general would expand the type of loans covered by the Military Lending Act to loans they say have similar problems as those already covered. The Pentagon, meanwhile, has said it's started a review process to make sure the regulation reflects changes in the marketplace.
If you're ever unsure about a loan or credit issue, talk to a credit counselor on base or at Consumer Credit Counseling Services.