The nation’s largest credit union, Navy Federal Credit Union, has been ordered to pay $28.5 million for alleged violations of the Consumer Financial Protection Act of 2010.
Navy Federal Credit Union limits its membership to military personnel and their immediate family members. According to the Consumer Financial Protection Bureau, during January 2013 and July 2015, Navy Federal engaged in deceptive debt practices in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Specifically, the CFPB found that Navy Federal, among other things, threatened to file suit, garnish wages, contact commanding officers, and change the credit scores of members who fell behind on payments. The CFPB further found that in most cases Navy Federal did not intend to act on any of its threats to its members.
The CFPB also found that Navy Federal had frozen the accounts of members who were delinquent on their debts, only allowing these members to pay on their delinquent accounts while preventing access to their funds. According to the CFPB, Navy Federal froze access to almost 700,000 members’ accounts.
On October 7, Navy Federal signed a stipulation and consent order, whereby Navy Federal agreed to pay more than $28 million to remedy its consumer protection violations. Of the $28.5 million in fines, $23 million will be given to victims who were affected by Navy Federal’s threatening communications. The remaining $5.5 million will go to the CFPB’s civil penalty fund. In addition to paying a fine, Navy Federal has promised to revise its collection policies.
The case is In the Matter of Navy Federal Credit Union, Case No. 2016-CFPB-0024.