On Monday, the Consumer Financial Protection Bureau (CFPB) announced the latest in a series of five enforcement actions involving military allotments: a $3.1 million consent order against a payment processor, Military Assistance Company (MAC) and its parent, Fort Knox National Company. The CFPB alleged that MAC had failed to disclose to servicemembers the amount of its fees and the fact that it had charged fees. MAC managed a payment processing system that took payments from servicemembers’ paychecks (allotments) and sent them to creditors such as car lenders or furniture sellers. Once the loan was paid off, excess funds would sometimes continue accumulating in a servicemember’s third-party payment processing account, often without the servicemember’s knowledge. MAC charged its allegedly undisclosed fees against these excess funds.
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