The Federal Trade Commission joined the Consumer Financial Protection Bureau (CFPB) in filing an amicus brief with the U.S. Court of Appeals for the Eleventh Circuit in the case of Louis v. Bluegreen Vacations Unlimited, Inc. The brief asks the appeals court to overturn a lower court decision that denied servicemembers the right to sue to invalidate a contract that they allege violates the Military Lending Act.
The district court erred, the brief argues, and its ruling could undermine enforcement of the Military Lending Act, a law designed to protect military families from predatory lending. Servicemembers are particularly vulnerable to predatory practices, which can undermine military readiness and morale.
The Act includes provisions that establish rules governing the types of loans that creditors can issue to active duty servicemembers and their dependents, and also requires that creditors provide servicemembers certain information before issuing a loan. Under the law, any agreement that violates the Act is void from the moment that it was signed.
The FTC and CFPB amicus brief relates to a case involving an active-duty servicemember and his spouse (Emmanuel and Tamarah Louis), who challenged a contract they signed with timeshare company Bluegreen that they allege was illegal under the law. The district court dismissed the lawsuit, ruling that the Louis family did not have the legal right to sue because they “[failed] to identify any concrete harm they have experienced as a result of the statutory violations.”
The brief argues that Mr. and Mrs. Louis have a legal right to challenge the contract in court because they suffer harm from their ongoing obligations under the contract, which they have claimed was illegal under the Military Lending Act. Specifically, they claim that the contract contains an illegal mandatory arbitration clause and that it failed to provide required disclosures regarding the annual percentage rate of interest for the loan (known as the Military Annual Percentage Rate). The brief also argues that the Mr. and Mrs. Louis sufficiently alleged that the court could remedy their injuries by declaring the contract invalid and awarding restitution or damages.
The Commission vote on whether to file the amicus brief with the CFPB was 4-0.