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Wednesday, October 12, 2016

CFPB Fines Navy Federal for Debt Collection Practices

The CFPB ordered Navy Federal Credit Union -- the nation’s largest credit union -- to pay $28.5 million in restitution and penalties for making undue threats to delinquent customers and cutting off electronic access to accounts and bank cards for customers that failed to pay delinquent loans.

The bureau found that the credit union -- which serves current and retired military servicemembers and their families as well as Department of Defense employees -- threatened customers with legal action and wage garnishment for failing to make payments, despite the fact that in the vast majority of cases, it had neither the intention nor the authority to do so. Thousands of Navy Federal customers also received misleading letters warning of severe credit consequences for falling behind on their loans, the bureau said, and some service members received threats from the credit union to contact their commanding officers if prompt payments were not received. A total of 700,000 accounts were frozen as a result of delinquency, leaving consumers without access to their checking accounts and debit cards.

In addition to the monetary enforcement action, the bureau also directed Navy Federal to create a comprehensive plan to address how it communicates to members about debt collection.

Read more.

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