To help avoid penalties and fines, pawnbrokers need to receive “safe harbor status.”

This simply means you achieve compliance protection from liability. To be given safe harbor status you must check the covered borrower status for all consumers, and you must retain that information for five years. Unlike the DOD or other credit reporting agencies, our solution does not require a consumer’s Social Security Number, making it an easier option for obtaining covered borrower status. Plus, you’ll avoid the additional risks and liability that comes with collecting SSNs.

In 2006, the Military Lending Act was passed, and in 2015, the Department of Defense issued a Final Rule amending the implementation rules to cover a wider range of products, including pawn loans. This means you must check to see if an applicant is an active-duty member of the armed services, Guard or Reserve forces, or a spouse or covered dependent of a service member before giving them a loan.

The Act limits all interest to a 36% Military Annual Percentage Rate (MAPR) for covered borrowers. Pawnbrokers in violation of this regulation could face steep penalties and fines (a minimum of $500 per violation).

Here’s where Equifax can help

Simple Y/N Status Indicator Results

The Equifax solution gives you the essential information you need regarding covered borrower status. You simply input an applicant’s name, address and date of birth to receive a straightforward Y/N status indicator. It’s that painless — quick and easy results without asking your customers for their Social Security numbers.

Flat-Fee Pricing Equals Cost-Efficient Protection

While the pawn loan is on the item, the MLA regulation applies to the consumer. So every consumer's status must be verified, whether you believe them to be associated with the military or not. Convenient and affordable, our Covered Borrower Status solution charges only mere cents per transaction with a small monthly minimum requirement.

Adding this solution to your current pawn loan origination process requires minimal setup and virtually no training. The MLA Covered Borrower Status solution from Equifax — an easier option for requesting covered borrower status, without the burdensome requirements of obtaining and protecting sensitive consumer information.

A More Convenient Solution

Easy and cost-efficient, our MLA Covered Borrower Status solution helps you comply with MLA regulations and avoid stiff penalties, while creating a better experience for you and your consumers.