[Federal Register Volume 78, Number 116 (Monday, June 17, 2013)]
[Proposed Rules]
[Pages 36134-36135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-14321]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 232

[Docket ID: DoD-2013-OS-0133]
RIN 0790-AJ10


Limitations on Terms of Consumer Credit Extended to Service 
Members and Dependents

AGENCY: Department of Defense.

ACTION: Advanced notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Department of Defense (the Department or DoD) issues this 
advanced notice of proposed rulemaking (ANPR) regarding enhancement of 
the protections that apply to consumer credit extended to members of 
the armed forces and their dependents, such as by a provision (as 
proposed in a recent Senate bill) that would require the Secretary of 
Defense to develop a policy on the predatory extension of credit 
through installment loans that target members of the armed forces and 
their dependents. This ANPR requests comment on the need to revise the 
Department's existing regulation that, in general, imposes certain 
limits on and requires certain disclosures relating to the provision of 
consumer credit to a covered borrower.

DATES: Comments must be received by August 1, 2013.

ADDRESSES: You may submit comments, identified by docket number and 
title, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Federal Docket Management System Office, 4800 Mark 
Center Drive, East Tower, Suite 02G09, Alexandria, VA 22350-3100.
    Instructions: All submissions received must include the agency 
name, docket number and title for this Federal Register document. The 
general policy for comments and other submissions from members of the 
public is to make these submissions available for public viewing on the 
Internet at http://www.regulations.gov as they are received without 
change, including any personal identifiers or contact information.

FOR FURTHER INFORMATION CONTACT: Marcus Beauregard, (571) 372-5357.

SUPPLEMENTARY INFORMATION: DoD invites comments and recommendations on: 
(1) The need to revise the implementing regulation (32 CFR part 232) 
adopted in August 2007,\1\ with special attention to the scope of the 
definition of ``consumer credit;'' (2) whether there is a need for 
change, and, if so, any specific revision(s) and why; (3) what should 
not be included in any revision and why; and (4) examples of 
alternative programs designed to assist Service members who need small 
dollar loans.
---------------------------------------------------------------------------

    \1\ See Limitations on Terms of Consumer Credit Extended to 
Service Members and Dependents, 72 FR 50580-50594 (August 31, 2007).
---------------------------------------------------------------------------

    For background, an excerpt of the text contained on pages 782 and 
783 of the Conference Report accompanying H.R. 4310, ``National Defense 
Authorization Act for Fiscal Year 2013'' (available at http://www.dtic.mil/congressional_budget/pdfs/FY2013_pdfs/AUTH_CRPT-112hrpt705.pdf) referring to this subject is as follows:
    ``Enhancement of protections on consumer credit for members of the 
armed forces and their dependents: The Senate amendment contained a 
provision (sec. 651) that would amend section 987 of title 10, United 
States Code, to require that vehicle title loans and payday loans, 
regardless of duration or whether they are open- or closed-end, are 
included within the definition of ``consumer credit'' contained in 
regulations promulgated by the Secretary of Defense pursuant to that 
section. The provision would also require the Secretary to develop a 
policy on the predatory extension of credit through installment loans 
that target members of the armed forces and their dependents. The House 
bill contained no similar provision. The Senate recedes. The conferees 
recognize the progress the Department of Defense has made since 
consumer protections for military members and their dependents against 
predatory lending were enacted in the John Warner National Defense 
Authorization Act for Fiscal Year 2007 (Pub. L. 109-364), codified in 
section 987 of title 10, United States Code. A recent report by the 
Consumer Federation of America, The Military Lending Act Five Years 
Later, found that `the law has been largely effective in curbing 
predatory . . . lending to covered borrowers.' Nevertheless, the report 
found that many predatory lenders have modified their products to avoid 
coverage by the Department's rules implementing section 987, and 
recommended that `the Department of Defense . . . conduct an internal 
study of service members, financial counselors, and legal assistance/
JAG officers to ascertain the impact of the current set of . . . rules 
on the use of defined products, problems caused by similar and emerging 
products, and the use of allotments to pay for commercial credit.'
    ``The conferees are concerned that the Department must remain 
vigilant to eliminate continuing, evolving predatory lending practices 
targeting service members and their families, and believe the 
Department should review its regulations implementing section 987, to 
address changes in the industry and the evolution of lending products 
offered since 2007, continuing use of predatory marketing practices, 
and other abuses identified by consumer protection advocates, including 
the Consumer Financial Protection Bureau's Office of Servicemember 
Affairs. The conferees direct the Secretary to conduct surveys of 
counselors, legal assistance attorneys, service members, and other 
appropriate personnel, and to consult with both consumer protection 
advocacy groups and representatives of the financial services industry 
to determine if changes to rules implementing section 987 are necessary 
to protect covered borrowers from continuing and evolving predatory 
lending practices, and to report to the Committees on Armed Services of 
the Senate and House of Representatives no later than 1 year after the 
date of enactment of this Act on the results of such review.''
    Comments and recommendations received in response to this ANPR will 
be reviewed as part of a proposed rulemaking, which may be the next 
step in this process.


[[Page 36135]]


    Dated: June 11, 2013.
Aaron Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2013-14321 Filed 6-14-13; 8:45 am]
BILLING CODE 5001-06-P