MLA in a Nutshell


What is the Military Lending Act?

The Military Lending Act (MLA) was put into place by the Department of Defense to protect members of the United States armed forces and their dependents by putting a cap on the amount of interest pawn brokers and creditors are allowed to charge people who qualify.


Who is covered?

  • Full-time active-duty service members who are under a call or order of 30 days
  • Full-time National Guard members who have been on full-time duty for 180 consecutive days or more
  • Members of a reserve component of the Army, Navy, Air Force or Marine Corps
  • A service member’s spouse
  • A service member’s child under the age of 21 or meets other conditions
  • A service member’s parent or in-law residing in the service member’s household who is dependent on the service member for more than half his or her support
  • An unmarried person who the service member has custody of by court and / or meets other conditions


What is the pawnbroker required to do to verify?

The burden is on the pawnbroker to check each customer against the DOD’s database. Not just customers who say they’re military – you will have to check every customer to be sure you’re protected.  You will use the customer’s last name, date of birth and social security number to verify whether they are listed as active duty status in the database. Whether they are covered or not, you will want to print the confirmation you receive and keep it on file for five years.


The system verified the customer is covered. Now what?

You may not charge interest rates higher than 36% Military APR (MAPR). You’ll need to verbally disclose the MAPR, describe the payment responsibilities, and disclose any applicable Regulation Z provisions. Your customer will sign a copy of the MAPR Disclosure form. You keep a copy on file for five years, and provide the customer with a copy as well. 


What happens if I have a procedure but someone makes a mistake, violating the law?

  • You will have to prepare a defense for unintentional errors
  • You will have to prove you have procedures in place to stay within compliance
  • Employees need to be trained on these MLA policies and procedures once yearly
  • Keep record of your training – you will have to prove you have a process in place for yearly MLA training


What happens if I knowlingly violate the law?

Violating the MLA is considered a misdemeanor. Penalties can include fines, imprisonment and civil liability to the covered borrower. 


Agencies enforcing the MLA

  • CFPB
  • FTC
  • DOD
  • Prudential regulators for depository institutions
  • State regulators “DOD intends on using federal and state regulators to oversee or enforce compliance with MLA to the extent possible under their statutory authority for their creditors”
  • Federal private right of action (This is the latest and most common form of enforcement.)


The process for verifying these customers in PawnMaster is as follows:

PawnMaster is MLA Compliant. For more information, call 1-888-949-7296.