Archive

Go to:

December 2017
SMTWTFS
12
3456789
10111213141516
17181920212223
24252627282930
31
< Nov Jan >
Leaguer Email Subscription

You are not currently subscribed. Click Subscribe below to receive the Leaguer email.

CFPB Orders Navy FCU to Pay $28.5M for Improper Debt Collection
Wednesday, October 12, 2016 6:35 AM

On Tuesday, the Consumer Financial Protection Bureau took action against Navy Federal Credit Union for making false threats about debt collection to its members, which include active-duty military, retired servicemembers, and their families. The credit union also unfairly restricted account access when members had a delinquent loan. Navy Federal Credit Union is correcting its debt collection practices and will pay roughly $23 million in redress to members along with a civil money penalty of $5.5 million.

“Navy Federal Credit Union misled its members about its debt collection practices and froze consumers out from their own accounts,” said CFPB Director Richard Cordray. “Financial institutions have a right to collect money that is due to them, but they must comply with federal laws as they do so.”

Navy Federal Credit Union is a federal credit union based in Vienna, Va. As a credit union, it offers a wide range of consumer financial products and services, including deposit accounts and loans. Membership in the credit union is limited to consumers who are, or have been, U.S. military servicemembers, Department of Defense civilian employees or contractors, government employees assigned to Department of Defense installations, and their immediate family members. It is the largest credit union in the country, with more than $73 billion in assets as of December 2015.

The CFPB investigation found that Navy FCU's practices, according to a CFPB press release, violated the Dodd-Frank Wall Street Reform and Consumer Protection Act. Specifically, the CFPB found that Navy Federal Credit Union:

  • Falsely threatened legal action and wage garnishment.
  • Falsely threatened to contact commanding officers to pressure servicemembers to repay.
  • Misrepresented credit consequences of falling behind on a loan.
  • Illegally froze members’ access to their accounts.

Enforcement Action

Under the terms of the enforcement order, Navy Federal Credit Union is required to:

  • Pay victims $23 million.
  • Correct debt collection practices.
  • Ensure consumer account access.
  • Pay a $5.5 million civil money penalty to the CFPB’s Civil Penalty Fund.

Read the Navy Federal Credit Union consent order.