H.R. 10439: Veterans and Consumers Fair Credit Act

This bill would expand certain consumer credit protections that currently apply to active-duty military members and their dependents so that they apply to all consumers.

What protections would be extended

The bill would amend the Truth in Lending Act to make the Military Lending Act’s key credit limits apply to ordinary consumer loans and credit products for everyone, not just covered military borrowers. In general, this means lenders would have to follow the same restrictions on terms and interest charges that already apply in the military lending context.

Key limits and exceptions

The bill says the new protections would apply broadly, but it would not apply to certain types of credit, including:

• Residential mortgages
• Auto loans made specifically to finance the purchase of a car and secured by that car
• Loans from federal credit unions, subject to existing federal credit union interest-rate limits

Credit cards and fee treatment

For open-end credit such as credit cards, the bill would require the annual percentage rate to be calculated using the same general method used under the Military Lending Act rules. It also includes a rule about which fees count toward the finance charge for certain credit card accounts. Some bona fide fees could be excluded from the finance charge, but the bill specifically says that this exclusion would not apply to:

• Credit insurance premiums or fees
• Fees for debt cancellation contracts
• Fees for debt suspension agreements
• Fees for other credit-related ancillary products sold with the credit card account

Enforcement

The bill would make violations subject to the same penalties and remedies that apply under the Military Lending Act. It would also allow:

• State attorneys general to sue to enforce the rules on behalf of residents
• State regulators to take enforcement action against creditors they regulate
• The Consumer Financial Protection Bureau to intervene in state cases, remove them to federal court in some situations, and appeal decisions

Before a state enforcement action is filed, state officials would generally need to notify the CFPB and any relevant prudential regulator, unless emergency action is needed.

Rulemaking

The CFPB would be required to issue implementing regulations within one year after enactment, in consultation with the Secretary of Defense. Those rules would have to be consistent with the Defense Department’s Military Lending Act rules and could not provide less protection than those rules provide for covered military borrowers.

Timing

The new requirements would take effect for credit extended after the earlier of:

• The date the CFPB’s final rules require compliance, or
• 18 months after enactment

Relevant Companies

Likely directly impacted publicly traded companies could include:

• COF — Capital One, a major credit card issuer that would need to comply with any broader limits on rates and fees for consumer credit.
• DFS — Discover Financial Services, which issues credit cards and other consumer credit products.
• AXP — American Express, a large issuer of consumer credit cards and related fees.
• JPM — JPMorgan Chase, which offers consumer credit cards and lending products.
• BAC — Bank of America, a major consumer lender and card issuer.
• WFC — Wells Fargo, which offers consumer credit cards and lending products.
• PNC — PNC Financial Services, a consumer lender and card issuer.
• USB — U.S. Bancorp, which provides consumer credit and card services.