WASHINGTON–A new report alleges “predatory lending practices” by EasyPay Finance and Utah-based, FDIC-supervised Transportation Alliance Bank (TAB Bank) are hurting military servicemembers, veterans, and their families.
The report was released by a coalition of consumer advocacy groups in advance of Memorial Day. The consumer groups issuing the alert include the Consumer Federation of America, National Consumer Law Center, Center for Responsible Lending, Americans for Financial Reform Education Fund, and the National Military Family Association.
According to the organizations, EasyPay Finance, which charges up to 189% APR, is popping up as a financing option at furniture stores, auto repair shops, pet stores and other retail outlets everywhere – including at shops near military bases where the loans are more likely to affect servicemembers. For example, the groups stated, EasyPay Finance is available at numerous auto repair locations and furniture stores that offer EasyPay loans near a military base.
‘Unacceptable’
“The fact that predatory lenders continue to target military families is unacceptable,” said Besa Pinchotti, CEO of the National Military Family Association. “Military families make tremendous 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 be preyed upon by lenders—especially when they’re at their most vulnerable—needing money for car repairs, to furnish their homes after a military-mandated moves or to make ends meet during a deployment.”
The consumer groups said that because banks are exempt from state interest rate caps, TAB Bank helps “disguise” EasyPay Finance loans as “bank loans,” enabling it to “charge exorbitant rates in states that prohibit them.”
One Virginia military consumer complained about “illegal” 119% interest that appeared to be far above Virginia’s legal rate, the groups said.
The complaints allege EasyPay Finance and TAB Bank may be violating or evading the Military Lending Act.
Complaints Filed
According to the organizations, numerous military consumers have complained about EasyPay loans to the Consumer Financial Protection Bureau, including:
- Outrageous interest rates of 96% to 189% charged to servicemembers, veterans or their family members, sometimes in states that do not allow those rates.
- Payments for months and years that do little to reduce the loan balance.
- Interest rates hidden in fine print. Applications required to be completed on small cellphones, making the contract language barely legible, leave consumers in the dark about the terms.
- Promises of elusive full interest rebates if paid in 90 days, with obstacles that prevent consumers from avoiding interest.
- Automatic payments not properly processed, leading to late payments that deprive the consumer of the interest rebate.
- Rude and unhelpful customer service and administrative errors, leading to missed payments, fees, and loss of the interest-free option.
- Harm to credit reports, including from loans paid in full or reported inaccurately. No response to consumer disputes.
- Debt collection issues, with “loans sent to collectors after the interest balloons, insults even when payments errors happened while the consumer was in the hospital, and collectors failing to correct credit reports after the loan is paid.”
Additional Issue
As CUToday.info also reported, a separate recent consumer alert warns of deceptive auto repair financing practices and tells consumers what steps to take if they’ve taken out an EasyPay/TAB bank loan. Military Families need to read the small print to avoid costly loans at high interest rates, and know their rights under the Military Lending Act. Those who have experienced these unreasonably high interest rates and deceptive financial lending practices should contact the Consumer Financial Protection Bureau for investigation.