A recent court ruling undermines a law protecting servicemembers from financial ruin and could lead to a “return to a time … when thousands upon thousands of Service members lose their security clearances or leave the Military due to financial hardship stemming from predatory lending,” MOAA and other parties wrote in a court brief last month.

The amicus (or "friend of the court") brief, filed Nov. 21 to the 11th U.S. Circuit Court of Appeals, comes in response to a district court decision allowing the enforcement of a contract which did not comply with the Military Lending Act (MLA), a 2006 law which caps interest rates, prevents lenders from forcing servicemembers to give up the right to sue or other legal rights, and includes other protections.

The law includes language which lets servicemembers void any contract violating MLA provisions, a passage making “the rest of the MLA uniquely effective,” according to the amicus brief. The plaintiffs alleged they didn’t receive MLA protections in the contract provided by the defendant, per a JD Supra report, but the district court allowed the contract to remain intact, saying the plaintiffs hadn’t shown how the lack of MLA protections caused harm.

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“The District Court in this case held that a contract that violated multiple provisions of the MLA could still be enforced, effectively ruling that … the key provision setting the MLA apart from other consumer protection legislation … is meaningless,” says the brief, which includes Blue Star Families, the National Military Family Association, and the United States Army Warrant Officers Association among its filers. “If this decision is not reversed, predatory lenders will realize they can return to military bases en masse, ignore all of the MLA’s protections, and only have to worry about lawsuits from the small minority of victims able to prove reliance on specific statutory violations.”

Ongoing economic concerns, including interest rates at 40-year highs, make the district court ruling even more dangerous, the brief states.

The Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CPFB) also filed an amicus brief seeking a reversal of the decision, according to a report by JD Supra.

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MOAA long has supported strong enforcement of the MLA, including recent advocacy against the 2018 CFPB decision to stop supervising lenders making MLA loans. The bureau reversed course and returned to earlier enforcement practices in 2021.

“MOAA is committed to ensuring our servicemembers have financial protections so they can keep focused on the mission,” MOAA President and CEO Lt. Gen. Dana T. Atkins, USAF (Ret) said at the time of the 2021 reversal.