The National Pawnbrokers Association is suing the Department of Defense over its Military Lending Act rule changes, asserting, among other things, that the DoD violated the Regulatory Flexibility Act by failing to consider the costs of compliance for small businesses.

The pawnbrokers also alleged the DoD violated the Administrative Procedure Act by offering no justification for its new requirement that lenders verify a credit applicant’s status as a covered borrower and because the final rule was neither signed by the Secretary of Defense, the undersecretary or any other authorized officer of the U.S. The final rule was signed by a Federal Register liaison officer at the DoD.

The pawnbrokers group and its members are seeking, among other things, a preliminary injunction barring the DoD from enforcing or applying the rule against pawn business until it considers the economic impact.

The DoD revised its MLA rule last year, and it made all provisions except those specific to credit-card accounts effective this Oct. 3. Provisions for credit cards take effect Oct. 3, 2017. The revisions expand the scope of the MLA rule to cover virtually all unsecured lending, subjecting loans to the Military Annual Percentage Rate cap of 36 percent. MAPR will also include charges for most “add-on” products including various forms of credit insurance and credit-related ancillary products.