On June 23, 2021 (86 FR 32723), the Consumer Financial Protection Bureau (CFPB) issued an interpretative rule in which the CFPB asserts statutory authority to conduct examinations, at those institutions that it supervises, regarding the risks to active-duty servicemembers and their covered dependents that are presented by conduct that violates the Military Lending Act (MLA).

Specifically, the CFPB referred to the Consumer Financial Protection Act of 2010 (CFPA) as the source of this authorization. Under the CFPA, the CFPB is required to conduct examinations of certain non-banks and of banks and credit unions with assets over $10 billion for the purposes of assessing and detecting “risks to consumers.” The CFPB stated risks to active-duty servicemembers and their dependents from conduct that violates the MLA are considered to be “risks to consumers.” Also, as the MLA may require compliance with TILA disclosure rules, compliance with the MLA is an activity subject to a Federal consumer financial law.

The CFPB stated this interpretation is also consistent with the enforcement scheme of the MLA, which by incorporating Truth-in-Lending Act’s (TILA) enforcement scheme authorizes the CFPB to use formal administrative adjudications, civil enforcement actions, and other authorities to enforce the MLA. That enforcement scheme is complemented by the CFPB’s use of the examination process to detect and assess risks to consumers arising from violations of the MLA.

The interpretative rule reviews the general background of the CFPA, the MLA, and the TILA, as well as setting forth the CFPB’s analysis of its authority.

The rule will be effective the day that it is published in the Federal Register. The rule may be accessed at: https://files.consumerfinance.gov/f/documents/cfpb_risks-active-duty-service-members-covered-dependents_final-rule_2021-06.pdf.