In Response To Letter From Warner & Kaine, DOD Announces Policy Change To Protect Servicemembers From Predatory Loans
WASHINGTON, D.C. – In response to a letter from U.S. Senators Mark Warner, Tim Kaine and three of their colleagues in July 2014, Secretary of Defense Chuck Hagel announced a policy change today that will prohibit the use of allotments by servicemembers to purchase, lease or rent personal property. This important change will protect servicemembers from businesses that use allotments to trap Soldiers, Sailors, Airmen, Marines and their families in illegal predatory loans.
“I’m very pleased Secretary Hagel and the Department of Defense are making important improvements to the allotment system to better protect our servicemembers from predatory lending,” Senator Warner said. “The current system allows unscrupulous companies to sign servicemembers up for questionable payment plans and then turn around and sue them for failure to pay. This policy change will prevent these sorts of abuses going forward and provide our military families with more of the protections they deserve.”
“I applaud Secretary Hagel and the Department of Defense for taking this important step to protect our servicemembers and their families from predatory loans,” said Senator Kaine. We need to improve Department of Defense policy to ensure when our troops seek financial support, unscrupulous businesses cannot divert payments from a servicemember's monthly income to support their own profits. By protecting their financial stability, these changes also help ensure the military readiness of our troops.”
The new regulations will go into effect in January 2015.