DOD Amends Military Lending Act (Fed. Reg.)

The Department of Defense ("DOD") issued a final rule expanding protections provided to service members and their families under the Military Lending Act ("MLA"). The final rule amended implementation regulations and addressed a wider range of credit products than the DOD's previous regulation. The final rule:

• extends MLA protections, including the Military Annual Percentage Rate ("MAPR") cap, to a wider range of credit products, including credit cards;
• modifies the MAPR to include fees for credit-related ancillary products sold in connection with the credit transaction, finance charges associated with consumer credit, and certain application and participation fees (for credit cards, the MAPR excludes certain fees if they are deemed to be "bona fide and reasonable");
• provides a safe-harbor mechanism to allow creditors to determine conclusively whether a consumer-applicant is a covered borrower;
• modifies the existing prohibition on rolling over, renewing or refinancing consumer credit; and
• subjects creditors to civil liability and administrative enforcement for MLA violations.

FDIC-supervised institutions and other creditors must comply with the rule for new covered transactions by October 3, 2016. For credit extended in a new credit card account under an open-ended consumer credit plan, compliance is required by October 3, 2016.