A loan may seem like a simple solution during a financial emergency. You apply, receive the money, and agree to repay it over time. However, the loan’s true cost may not become clear until you review the interest, fees, and total payments.
If you received a CashNetUSA loan while serving on active duty, federal law may limit how much you can be charged. The Military Lending Act, commonly called the MLA, generally limits the Military Annual Percentage Rate to 36% for covered consumer credit provided to covered borrowers.
This does not mean every CashNetUSA loan issued to a service member violated the law. The borrower’s military status, the type of credit, the date of the transaction, and the charges included in the MAPR must all be reviewed.
According to a lawsuit involving CashNetUSA, loans were allegedly provided to active-duty service members and military spouses with annual rates ranging from 222% to 579%. These are allegations in a pending legal action and should not be treated as final findings by a court.
This article explains the basic protections and the information that may help an attorney review a possible CashNetUSA military loan claim.
Important Takeaways
- Covered consumer credit generally cannot carry a MAPR above 36%.
- MAPR may include interest, fees, credit insurance, and other credit-related products.
- Interest rate, APR, and MAPR are not always the same.
- The borrower generally must have held covered status when the credit transaction began.
- Not every loan involving a service member is covered by the MLA.
- A triple-digit APR may be a serious warning sign, but it does not establish every part of an MLA claim by itself.
- CashNetUSA loans do not need to be advertised as military loans for the MLA to apply.
- Borrowers should preserve their loan agreements, statements, payment records, communications, and military documents.
What Is the Military Lending Act?
The Military Lending Act is a federal law that gives certain financial protections to active-duty service members and their qualifying dependents.
One of its central protections is a limit on the cost of covered consumer credit. A creditor generally cannot require a covered borrower to pay a MAPR greater than 36%.
The MLA also restricts certain loan conditions. Depending on the transaction, a creditor generally cannot:
- Require a covered borrower to submit to mandatory arbitration
- Require the borrower to waive certain legal rights
- Demand unreasonable notice before the borrower can take legal action
- Require repayment through a military allotment
- Prohibit the borrower from paying the debt early
- Charge a penalty for early payment
- Use certain forms of access to a financial account as security
These protections matter because fees and other charges can quickly make a small loan much more expensive. A charge may look minor when shown as a dollar amount, but its effect may be much larger when included in an annual rate calculation.
The federal rules governing MLA credit terms appear in 32 C.F.R. Part 232.
What Does the 36% Limit Cover?
The MLA’s 36% limit applies to MAPR, not merely to the interest rate printed in a loan advertisement.
Depending on the credit product, MAPR may include:
- Interest
- Applicable finance charges
- Credit insurance premiums or fees
- Debt-cancellation fees
- Debt-suspension fees
- Fees for credit-related ancillary products
- Certain application fees
- Certain participation fees
Limited exceptions can apply. For example, some reasonable and bona fide fees associated with credit card accounts may be excluded when the regulatory requirements are satisfied.
This is why reviewing a CashNetUSA military loan may require more than finding one percentage in the agreement. The disclosed interest rate or standard APR may not show every cost included in MAPR.
However, not every fee is automatically part of the calculation. The type of credit, nature of the charge, and method used to impose it all matter. An attorney may need to review the complete agreement and account history before determining the MAPR.
Who Is a Covered Borrower?
The MLA does not protect every person who has ever served in the military. A person generally must qualify as a covered borrower at the relevant time.
Covered borrowers may include:
- Service members on qualifying active-duty orders
- Members serving on Active Guard and Reserve duty
- Spouses of covered service members
- Certain children and other qualifying dependents
The active-duty order generally must not specify a period of 30 days or fewer.
Timing is important. Someone serving on active duty today may not have held covered status when an older account was opened. On the other hand, someone who has since left active duty may have been covered when the loan began.
If you received a CashNetUSA loan, locate the exact date when you became obligated on the transaction or established the account. Compare it with your military orders or dependent-status records.
A difference of a few days may affect whether the MLA applies. Borrower coverage should be confirmed with documents rather than assumptions.
Does the MLA Cover Every Type of Loan?
No. The Military Lending Act covers many forms of consumer credit, but it also contains important exceptions.
Consumer credit generally falls within the MLA when it is offered primarily for personal, family, or household purposes and either carries a finance charge or is payable under a written agreement in more than four installments.
Depending on the transaction, covered credit may include certain:
- Payday loans
- Installment loans
- Vehicle title loans
- Personal lines of credit
- Credit cards
- Private student loans
- Other consumer-credit products
However, private student loans must be evaluated carefully, and many federal student loans are treated differently under Regulation Z.
The MLA generally excludes:
- Residential mortgages
- Home-equity loans and lines of credit
- Reverse mortgages
- Credit expressly intended to finance a vehicle purchase when the vehicle secures the credit
- Credit expressly intended to finance personal property when the purchased property secures the credit
- Certain transactions exempt from Regulation Z
The name of a loan does not provide the complete answer. Its purpose, repayment arrangement, finance charges, security, and other terms may need to be examined.
What If a CashNetUSA Loan Shows an APR Above 100%?
A triple-digit APR is difficult to ignore, especially if the borrower did not understand how much the loan would eventually cost.
If your CashNetUSA military loan shows an APR above 100%, preserve the agreement and consider having it reviewed. However, a high APR alone does not establish every required element of an MLA violation.
A complete review should answer questions such as:
- Were you a covered borrower at the relevant time?
- Was the transaction covered consumer credit?
- Which legal entity extended the credit?
- What APR was disclosed?
- What was the applicable MAPR?
- Which fees and additional costs were charged?
- When did the alleged violation occur?
- When did you discover the possible violation?
- Did the agreement contain other terms restricted by the MLA?
A disclosed APR above 36% may strongly suggest that the MAPR deserves examination. Still, the legal conclusion should be based on the complete transaction.
APR and MAPR Are Not Always the Same
APR stands for Annual Percentage Rate. MAPR stands for Military Annual Percentage Rate. The terms sound similar, but they can measure different sets of costs.
The Truth in Lending Act and Regulation Z generally govern how a standard APR is calculated. MAPR uses calculation methods tied to Regulation Z but may include additional fees and credit-related products identified by the MLA regulations.
Suppose a loan carries interest and a separate fee for a credit-related add-on product. The standard APR may reflect the interest and certain finance charges. The MAPR may also need to include the add-on fee.
This difference is one reason a legal review should include the entire CashNetUSA loan agreement and account history. Looking only at the monthly payment or advertised interest rate may leave out important costs.
What Is the Difference Between the MLA and SCRA?
The Military Lending Act and the Servicemembers Civil Relief Act, or SCRA, are separate federal laws. Both protect service members, but they generally apply in different situations.
The MLA governs the cost and terms of certain consumer credit extended while a person holds covered military or dependent status. Its rate protection generally limits MAPR to 36%.
The SCRA may limit interest to 6% on certain debts incurred before a service member entered military service. To receive that protection, the service member may need to provide the creditor with written notice and military orders or another appropriate indicator of service.
In simple terms:
- Eligible credit obtained while on active duty may raise an MLA issue.
- Eligible debt incurred before entering military service may raise an SCRA issue.
The correct law depends on when the debt began and the surrounding facts. Borrowers should avoid placing all military-debt problems into the same category.
What Could Happen If a Loan Violated the MLA?
The Military Lending Act provides several possible remedies for violations.
Depending on the evidence, a covered borrower may seek:
- Actual damages
- Statutory damages of at least $500 for each violation
- Punitive damages when appropriate
- Equitable or declaratory relief
- Other relief available under applicable law
- Court costs and reasonable attorney’s fees in a successful case
Federal law also states that a credit agreement, promissory note, or other contract that fails to comply with the MLA or contains a prohibited term may be void from the beginning.
A creditor that knowingly violates the law may also face criminal penalties. However, it would be inappropriate to characterize every possible error as a knowing criminal violation without evidence.
These are possible remedies, not guaranteed results. Whether they apply to a particular CashNetUSA military loan depends on the borrower’s status, the credit product, the account terms, the dates, and the supporting evidence. The remedies and limitations are addressed in 10 U.S.C. § 987.
Documents That May Help With a Review
You do not need to calculate MAPR by yourself before contacting an attorney. Begin by collecting the records already available to you.
Helpful documents may include:
- The original CashNetUSA agreement
- The credit application
- Account-opening disclosures
- Truth in Lending disclosures
- Monthly or periodic statements
- Payment history
- Bank statements showing the loan deposit
- Records showing fees or loan renewals
- Emails and text messages about the account
- Screenshots from the online portal
- Collection notices
- Military orders
- Proof of active-duty service
- Documents showing qualifying dependent status
- Records showing when active-duty service began or ended
Do not edit the original files. Save complete copies and preserve their original dates when possible.
If the records are still available through an online account, consider downloading them promptly. Online information may not remain accessible forever.
When Should You Speak With an Attorney?
Consider requesting a legal review if:
- You obtained a CashNetUSA loan while serving on active duty
- You were a qualifying military spouse or dependent when the account was opened
- The agreement shows an APR above 36%
- The loan carried a triple-digit APR
- Fees or additional products increased the cost
- The contract required arbitration
- Repayment through a military allotment was required
- You were charged for paying the debt early
- You do not understand how the MAPR was calculated
- You have access to the original agreement or payment records
Federal law imposes filing deadlines. An MLA civil action generally must be brought by the earlier of two years after discovering the violation or five years after the violation occurred. Applying that deadline to a particular account may require legal analysis.
Waiting can make documents more difficult to obtain and may affect legal rights.
Talk to Varnell & Warwick About a CashNetUSA Loan
Varnell & Warwick is investigating CashNetUSA loans provided to active-duty service members and qualifying military dependents. The lawsuit alleges that covered borrowers received loans carrying rates far above the MLA’s 36% MAPR limit.
If you obtained a CashNetUSA loan while serving on active duty, or while you were the qualifying dependent of an active-duty service member, our attorneys can review the available records and discuss whether further action may be appropriate.
The review may include your military status, account-opening date, loan agreement, APR, potential MAPR, fees, payment records, disclosures, and other contract terms.
A very high rate may be an important warning sign, but every case must be evaluated according to its own facts. No result can be guaranteed before the documents are reviewed.
A CashNetUSA loan does not have to be called a military loan for the Military Lending Act to apply. What matters is whether covered consumer credit was provided to a covered borrower and whether the transaction complied with federal law.
This post was written by a professional at vandwlaw.com. Varnell & Warwick is a full-service law firm in Tampa, Florida, specializing in business law, civil litigation, real estate law, and legal counsel. As one of the leading law firms near you, we serve clients throughout the Tampa Bay area. Our experienced team provides expert guidance and reliable solutions, making us a trusted choice for legal services near you focused on quality, value, and performance.
