On August 26, 2016, the Department of Defense (DOD) issued an interpretive rule providing guidance on the DOD’s regulations implementing the Military Lending Act (MLA). Specifically, the interpretive rule aims to clarify certain ambiguities in the DOD’s July 2015 final rule, which significantly expanded the scope of the MLA to cover new types of creditors and new credit products. Presented in a series of questions and answers—19 in total—the interpretive rule by no means resolves all ambiguities present in the July 2015 final rule. The interpretive rule does, however, provide much needed clarity on a handful of issues that are critical to creditors’ compliance with the MLA. In this alert, we offer a high-level summary of some of the most significant issues addressed by the interpretive rule, with a more detailed alert to follow.

BACKGROUND -

Following a September 2014 notice of proposed rulemaking, the DOD finalized sweeping changes to the rules that implement the MLA on July 22, 2015. The amended MLA rules cover a far broader range of creditors and credit products than were covered under the previous rules. Most notably, under the previous DOD rules, the MLA generally applied only to “payday” loans, vehicle title loans, and refund anticipation loans. Under the amended rules, the MLA applies to most non-mortgage closed-end and open-end credit, including installment loans, student loans, single-payment loans, lines of credit, and credit cards.