ALEXANDRIA, Va.—The U.S. District Court for the Eastern District of Virginia has dismissed a class action lawsuit related to the Military Lending Act's (MLA) exception for motor vehicles. Among the points in the decision, the court determined Guaranteed Auto Protection (GAP) insurance is directly related to the purchase of a vehicle loan.
The plaintiffs in the class action lawsuit argued that including GAP insurance, as well as other fees associated with a vehicle loan, brings the loan outside of the MLA's exception, NAFCU noted in its review of the decision.
In 2020, the Department of Defense (DoD) reverted language for Question No. 2 related to GAP insurance of its MLA interpretive guidance after a revision in 2017 created confusion. NAFCU noted that it and the Defense Credit Union Council had pressed the DoD to completely rescind the question.
The court also determined that the 2016 guidance – to which Question No. 2 was reverted – only applies to personal property and does not address motor vehicles.