A recent report has indicated that the predatory lending practices of EasyPay Finance and Transportation Alliance Bank (TAB Bank) are hurting military servicemembers, veterans, and their families.
TAB Bank is based in Utah and is supervised by the Federal Deposit Insurance Corporation.
The report – made by consumer advocacy groups – was released in advance of Memorial DAy.
EasyPay Finance can charge up to yearly interest rates of 189%. And it is appearing as a financing option at various stores, including at shops near military bases where the loans are more likely to impact servicemembers.
Banks are exempt from state interest rate caps. As such, TAB Bank helps veil EasyPAy Finance loans as bank loans, allowing the charging of excessive rates in states that prohibit them. These parties may be violating or evading the Military Lending Act, which limits annual interest rate on loans to military servicemembers and their dependents to no higher than 36%.
The advocacy groups have a petition to urge the FDIC to stop banks from helping nonbank lenders disguise loans as bank loans exempt from state interest rate limits.
Military consumers have complained about EasyPay loans to the Consumer Financial Protection Bureau, citing issues including – but not limited to – egregious interest rates of 96% to 189%, failed automatic payments, rude and unhelpful customer service and administrative errors, and debt collection issues.
“The Department of Defense studied high-interest loans like those issued by EasyPay Finance and TAB Bank and concluded they harmed troops and their families – and undermined military readiness,” said Nadine Chabrier, senior policy counsel at the Center for Responsible Lending. “TAB Bank and retailers, such as Meineke, should stop facilitating the sale of EasyPay loans, which inflict pain upon military communities and consumers across the country. The FDIC is responsible for supervising TAB Bank and should stop it from abusing its charter by enabling these predatory loans.”