CFPB Fines Navy Federal Credit Union $28.5 Million
The CFPB has fined Navy Federal Credit Union $28.5 million for improper debt collection action. That breaks down to $23 million going to victims and a $5.5 million civil penalty, the federal consumer agency said.
The CFPB said the credit union, which serves active-duty military, retired service members and their families, “deceived consumers to get them to pay delinquent accounts.” Among the actions reportedly taken by the credit union:
- Falsely threatening legal action and wage garnishment for outstanding loans
- Falsely threatening to contact commanding officers to pressure service members to repay loans
- Misrepresenting credit consequences of falling behind on a loan
- Illegally freezing members’ access to their accounts
The credit union’s action affected “hundreds of thousands of consumers” between January 2013 and July 2015, and violated the Dodd-Frank Wall Street Reform and Consumer Protection Act. “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.”