The CFPB is committed to ensuring that firms do not violate the law with impunity. Yet unscrupulous lenders and other bad actors have a longstanding practice of repeatedly targeting members of the armed services and their families. This practice jeopardizes the financial security, morale, and readiness of American servicemembers. And, as a result, it jeopardizes our national security.
Fortunately, in 2006, Congress took action to protect military families by passing the Military Lending Act (MLA), which provides active-duty servicemembers and their dependents a variety of important legal rights. But these rights are meaningless unless they are enforceable in court. That is why the Bureau partnered with the Federal Trade Commission to file a friend-of-the-court (“amicus”) brief in the United States Court of Appeals for the Eleventh Circuit seeking to safeguard all of the protections that the MLA affords to active duty servicemembers and their families.
The plaintiffs in the case took out a loan to purchase a vacation timeshare. They allege that the loan violates the MLA because it includes a mandatory arbitration provision and because the lender failed to provide them certain required disclosures. And under the MLA, loans that don’t comply with the law’s requirements are void—as if they never existed. The lender, though, argues that even if the loan was illegal and void, there is nothing the plaintiffs can do about it because the court lacks jurisdiction to hear the case.
The message of our brief is simple: when American servicemembers seek to enforce their rights in court, the plain text of the law lets them do that. Congress made clear that when a lender extends a loan to a servicemember that fails to comply with the MLA, the loan is rendered void in its entirety. And there is no doubt that Congress allowed servicemembers to ask federal courts to award restitution for payments made on the illegal loan and provide any other appropriate relief.
The lender in the case argues that, even if it violated the MLA, the court does not have the power to hear the case because the plaintiffs did not suffer any concrete injury. That is just not the case. The plaintiffs made a down payment on the loan, and courts have long recognized that economic injury is exactly the sort of injury that courts have the power to redress. Because the plaintiffs have shown that they have a personal stake in the outcome of this litigation, there is no reason the court should not hear the case and evaluate the plaintiffs’ claims on the merits.
Briefs like this one are part of the CFPB’s efforts to ensure that consumers receive the full benefit of the consumer protections provided for by Congress and that those who break the law are held to account. To that end, the CFPB will continue to use every tool available to ensure that servicemembers and others are able to exercise their rights in court.
The case is Louis v. Bluegreen Vacations Unlimited, Inc., No. 22-12217 (11th Cir.).