2024-28521. Notice of Information Collection and Request for Public Comment

Table 1—SDL Program Prohibited Practices

Prohibited practice	Prohibited practice definition
i. High-Rate loans	Loans that exceed the lower of the following two rates: (1) an all-inclusive 36% APR (using the methodology prescribed in 32 CFR 232.4 of the Military Lending Act (referred to as the Military Annual Percentage Rate [MAPR]; or (2) the interest rate limit as set by the state agency that oversees financial institutions in your state.
ii. Coerced automated repayments	Loans that: (1) have delayed loan disbursements for borrowers who do not agree to automatic repayments, (2) charge fees for borrowers who select manual payments, or (3) require borrowers to make payments using wire transfers or other means that may result in additional fees for borrowers.
iii. Excessive refinancing	Loans that allow refinancing before at least 80% of the principal has been repaid.
iv. Loan insurance or credit card add-ons	Loans that offer add-on insurance or credit card products, whether they are automatic or not, that require borrowers to opt-in or opt-out to decline coverage or require the borrower to accept or opt-out of a credit card. For example, loans that automatically include insurance products such as credit, life, disability insurance or involuntary unemployment insurance coverage, or loans that automatically open a credit card for the borrower.
v. Security interests in household goods, vehicles, or deposit accounts. Exception: loans with a savings account component or credit builder loans	Loans that are secured, except for loans secured by a savings account for loans with a savings component or credit builder loans.
vi. Excessive late fees on missed loan payments	Loans that charge more than one fee per late payment.
vii. Abusive overdraft practices	Lenders who hold the account from which repayment is being made may not collect a loan payment from the borrower's account that overdraws the account, triggering overdraft fees.
viii. Aggressive debt collection practices	Loans in which the lender: • Does not offer a workout program or other accommodations to help struggling borrowers before pursuing other debt collection avenues. • All debt collection activities must comply with the Fair Debt Collection Practices Act, whether conducted by the lender, a contract debt collector or sold to third party debt collectors. • Does not disclose to borrowers the details of its debt collection practices or provide notice to a borrower when its account is placed with debt collectors.
ix. Forced arbitration clause, class action ban, and other bans on legal remedies	Loan contracts that contain clauses that prevent borrowers from seeking legal remedies in court, such as mandatory arbitration clauses, or clauses requiring that the borrower waive the right to a trial by jury or the right to participate in a class action lawsuit.