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WASHINGTON DC2 51
July30,2014TheHonorableChuckHagelSecretaryofDefense1000DefensePentagonWashington,DC20301-1000DearSecretaryHagel:WewritetoexpressconcernoverthelongdelayintheDepartment sreviewoftheservicememberallotmentsystem.Whilewerecognizethecomplexityoftheissue,weurgeyoutoexpeditetheDepartment seffortstodeterminehowtheallotmentsystemcouldbeimprovedtoprotectservicemembers.Theallotmentsystem,whichallowsmerchantstodivertpaymentsautomaticallyfromaservicemember smonthlyincome,unfortunatelycontinuestobeabusedbyunscrupulousactors.Forexample,therehavebeenpressreportsaboutatleastonebusinessallegedtobeusingtheallotmentsystem-amongotherpaymentarrangements-tosignservicemembersupforquestionablepaymentplansandthensuingthemforfailuretopay.Andyesterday,theConsumerFinancialProtectionBureauand13StateAttorneysGeneralannounceda 92millionenforcementactionagainsttwobusinessesthatusedtheallotmentsystemtotrapthousandsofservicemembersinillegalpredatoryloans.Weapplaudthisrecentenforcementeffort,andjoinincommendingyoufororderingareviewoftheDepartment sallotmentsystemandforaskingforrecommendationstoprotectservicemembers.However,giventheknownproblems,webelievethatthereisanurgentneedtoimprovetheallotmentsystemtopreventthesesortsofabusesgoingforward.Assuch,we
urgeyoutoexpeditethecompletionofthisreport.Welookforwardtoyourpromptresponseandtoworkingwithyoutoprovideservicememberswiththeprotectionstheydeserve.Sincerely,
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RichaTdBlumenthal
UnitedStatesSenatorJackReedUnitedStatesSenatorMarkWarnerUnitedStatesSenatorUnitedStatesSenator