Judge Narrows, But Preserves, Military Lending Act Case Against Bank Of America
By CU Today Staff —
CHARLOTTE, N.C.—A federal judge in North Carolina has allowed the core of a proposed class-action lawsuit accusing Bank of America of violating the Military Lending Act (MLA) to move forward, declining to fully adopt a magistrate judge's recommendation that the case be dismissed while trimming several claims. The ruling keeps alive allegations that the bank improperly charged active-duty servicemembers interest rates above the MLA's 36% cap on certain consumer credit, Virginia Lawyers Weekly reported.
U.S. District Judge Max O. Cogburn Jr. agreed to dismiss some state law and related claims but rejected the recommendation to throw out the plaintiffs' principal MLA allegations. The lawsuit contends Bank of America improperly assessed interest and fees on credit accounts held by military borrowers in violation of federal protections designed to shield servicemembers and their families from predatory lending practices. The judge concluded the plaintiffs had plausibly alleged violations sufficient to proceed at this stage of the litigation.
The Military Lending Act limits the military annual percentage rate on covered loans to 36% and provides additional protections for active-duty servicemembers and their dependents. The plaintiffs seek to represent a nationwide class of affected military borrowers, while Bank of America has denied violating the law and sought dismissal of the case. The latest ruling means the litigation will move forward on the remaining federal claims, Virginia Lawyers Weekly reported.
The decision marks another setback for the bank's effort to end the case before discovery. While narrowing the scope of the lawsuit, the court's order leaves intact the central question of whether Bank of America's lending practices complied with the MLA's interest-rate limitations, an issue that will now be litigated as the case proceeds, Virginia Lawyers Weekly noted.
Originally reported by CU Today.