The Consumer Financial Protection Bureau said on Tuesday (Oct. 11) it ordered Navy Federal Credit Union to pay $28.5 million in fines and restitution over civil charges it allegedly made fake threats about debt collection to members of the credit union.
According to the report, the CFPB also said Navy Federal Credit Union “unfairly” restricted access when customers had delinquent loans. The Navy Federal Credit Union serves a lot of active duty and retired military members. The Navy Federal Credit Union settled the allegations without admitting or denying wrongdoing. The report noted it's the largest credit union in the country with greater than $77.8 billion in assets as of the end of June.
"Where our collections practices have come up short in the Consumer Financial Protection Bureau's estimation, we have made all the necessary changes. We have cooperated with the CFPB throughout the process," the credit union said in a statement to Reuters. It went on to say it is “proud of its 83-year history” of helping members reach their financial goals.
According to the report, of the $28.5 million, $23 million will go to consumers who were hurt by the credit union’s practices, while $5.5 million will be the size of the penalty. The CFPB alleges Navy Federal Credit Union sent letters to some members that said the credit union would take legal action if the customers did not pay. The threat, noted the report, rarely turns into legal action. Some of the letters even threatened to garnish wages of members, which can only be done with a court order. The CFPB contend the letters were sent out starting in Jan. 2013 and continued through July 2015. Some 193,000 customers received the letters, although it only filed 5,000 lawsuits to collect debts.