Lawmakers Look to Protect Service Members from Predatory Lenders

State Reps. Connie Pillich (D- Montgomery) and Matt Lundy (D-Elyria) Thursday announced they will soon introduce the Ohio Military Lending Act, legislation to crack down on predatory lending targeting U.S. military members and their families. 

“The Ohio Military Lending Act gives us the opportunity to implement a common-sense solution to the complex problem of predatory lending targeting military families,” said Rep. Pillich. “During lame duck, we should be seeking out policy that gives us the chance to implement meaningful reforms in our state. Instead, it seems we’ve squandered some of our precious time debating extreme policies that wouldn’t even pass Constitutional muster.”

Pillich noted that today the House Health & Aging Committee voted to pass the controversial, so-called “Heartbeat Bill” while her legislation to connect Ohio veterans to the Department of Veterans Services through income-tax returns, House Bill 166, has yet to receive a single hearing.

The Ohio Military Lending Act aims to reduce predatory lending practices targeting service members, close loopholes often exploited by pay-day lenders and expand protections provided to service members and their families.

The bill would extend the current 28 percent cap on the annual percentage rate of interest charged for credit products to credit cards, which are now exempt under the federal Military Lending Act. The legislation requires lenders to use sound lending practices, including verifying borrowers’ ability to repay the loan, sharply limiting repeat loans, setting an upper limit on indebtedness and prohibiting requiring post-dated checks as a condition of extending credit. Creditors would also be prohibited from requiring service members to submit to arbitration or to waive their rights under the services members’ Civil Relief Act.

“Pay-day lending is a vicious cycle that traps many consumers and, more frequently, military service members in Ohio,” said Rep. Lundy. “While education is key, it is also important that the State of Ohio take steps to prevent lending that preys on military members and their families at its source.”

According to a US Department of Defense survey, nearly 35 percent of service members use cash advance, pay-day lending products compared to 30 percent of the general population. To discourage these high-risk, deceptive transactions, creditors would also be required to provide military borrowers with additional disclosures, including a statement that the service member should seek out options other than high-cost credit.

The Ohio Military Lending Act now awaits formal introduction and committee assignment for further consideration.