Utah-based loan company and bank allegedly charged military borrowers illegally high interest rates
A company that provides loans for car repair, furniture and pets to consumers, including U.S. service members, charges up to 189% interest in some areas, working with a U.S.-based bank to circumvent federal laws that limit predatory lending, a new report alleges.
EasyPay Finance, a Carlsbad, Calif. company that sources repair loans offered at places like AAMCO, Jiffy Lube, Midas and Meineke, and pet and furniture stores near military bases, has partnered with Transportation Alliance Bank, based in Ogden, Utah, to provide loans with interest charges of 96% to 189%.
Such rates are illegal in most states for non-bank lenders, but EasyPay makes the loans through the Transportation Alliance, which allows them to be classified as bank loans, a practice known as the name “rent-a-bank,” according to a coalition of advocacy groups, including the National Consumer Law Center, the Center for Responsible Lending and the National Military Family Association.
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Complaints by military borrowers to the Consumer Financial Protection Bureau appear to show companies are violating or circumventing the Military Loans Act of 2006, which limits annual interest on loans to active duty military personnel or their families to 36% .
“It is inadmissible that TAB Bank and EasyPay Finance are providing loans with up to 189% interest to military and veterans,” Lauren Saunders, associate director of the National Consumer Law Center, said in a press release. “Auto repair shops, pet stores and other reputation-conscious retailers should stop directing customers to predatory loans from TAB Bank and EasyPay Finance.”
The National Consumer Law Center is one of many organizations that have called on the Federal Deposit Insurance Corporation, which regulates banks, to crack down on these types of arrangements between lenders and banks.
A spokesperson for EasyPay said the company planned to answer questions from Military.com but did not respond per post.
TAB Bank officials did not respond to a request for comment.
“The Ministry of Defense studied high interest loans like those issued by EasyPay Finance and TAB Bank and concluded that they harmed troops and their families – and undermined military readiness,” said Nadine Chabrier. , senior policy adviser at the Center for Responsible Lending, in a statement. “The FDIC is responsible for overseeing TAB Bank and should prevent it from abusing its charter by authorizing these predatory loans.”
Dozens of service members have complained to the CFPB or the Ripoff Report consumer website of EasyPay or its owner, Duvera Billing Services, alleging high interest rates, debt collection issues, damage to their credit and automatic payment problems or promises of interest rebates if paid within 90 days.
A military consumer in Illinois received a $1,500 loan for a car repair and has since made payments of $2,300, but still owes $1,300 – an interest rate of 151%.
Another Virginia Beach military customer took out a loan nearly two years ago to repair his transmission, but noticed after receiving statements that he was being charged 96% interest.
“I called the company and told them I was a service member and couldn’t be billed. … They said they would fix it but nothing happened. … I still have about 80% [of the original principal]“wrote the borrower to the CFPB.
Still others have written about getting a loan to buy a puppy and paying triple the original cost with a loan from EasyPay or Duvera. An active duty serviceman in Nevada was charged an interest rate of 189% on an $800 loan.
“I’ll end up paying $2,400, which will put $1,600 into these businesses [sic] poached. Your [sic] welcome! I’m fighting for your right to rip off hardworking Americans, DUVERA!”
The company responded on the CFPB website, saying it believed the company had acted “appropriately, as authorized by contract or law,” according to the site.
Besa Pinchotti, head of the National Military Families Association, said such predatory practices are unacceptable, especially against military families trying to make ends meet.
“Military families make enormous sacrifices for our country every day. It’s outrageous that after all the work we’ve done to protect our military families, they continue to fall prey to money lenders,” Pinchotti said. in a press release.
This article will be updated following a response from either company.
— Patricia Kime can be reached at [email protected] Follow her on Twitter @patriciakime
Related: Military advocates push for tougher oversight of predatory lenders
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