Navy Federal Credit Union is a Virginia based credit union that limits its membership to people who have been or are currently serving in the U.S. military, Department of Defense employees and contractors, and their immediate family members. It is currently the largest credit union in the United States. Navy Federal has recently been penalized for using improper debt collection practices.
On October 11, the Consumer Financial Protection Bureau (CFPB) ordered Navy Federal Credit Union to pay approximately $23 million to victims of its practices, as well as a civil penalty of $5.5 million to the CFPB Civil Penalty Fund. In addition, Navy Federal will make a comprehensive plan to correct is debt collection practices.
A CFPB investigation led to the penalties against Navy Federal. The investigation uncovered a multitude of deceptive practices used to get customers to pay delinquent accounts. One such practice involved the false threat of legal action and wage garnishment. Navy Federal made calls and sent letters to its delinquent customers threatening suits and garnishment, when in fact the credit union had no intention or authority to do so. Additionally, the credit union threatened to contact servicemembers’ commanding officers if payment was not promptly made on their accounts. This was alarming for the members of the military since consumer credit problems can lead to loss of security clearance or disciplinary proceedings. Even though Navy Federal’s representatives made these threats, it did not intend to contact the commanding officers and again had no authority to do so.
Misrepresentation of Consequences
Navy Federal also misrepresented consequences of falling behind on a loan. The credit union sent letters to members stating that they would find it difficult or impossible to obtain credit because of delinquencies- however, Navy Federal had no basis for those claims. Navy Federal also represented that it could raise or lower a member’s credit score when in reality it could only report information to credit reporting agencies. Furthermore, the credit union illegally froze members’ access to their accounts.
If you suspect you are a victim of unfair debt collection practices by Navy Federal Credit Union or any other creditor, please contact our office and set up a free consultation with an experienced attorney.
Kathryn Davis is an attorney at the Bond & Botes Law Offices in Huntsville and Decatur, Alabama. She holds a Bachelor of Arts from Auburn University, and a Juris Doctorate from Samford University, Cumberland School of Law. She is passionate about utilizing the bankruptcy process to help clients navigate through what is usually some of the lowest points in their lives. Read her full bio here.