VIENNA, Va.–While Wells Fargo remains in the media and public spotlight for its account opening scandal, Navy Federal Credit Union has not escaped similar scrutiny after it was hit by the CFPB for a variety of offenses around debt collection.
The CFPB fined Navy FCU $5.5 million for its debt collection practices, and ordered that the world’s largest credit union repay “victims” an additional $23 million. Media coverage has appeared across the country, with the Washington Post’s Joe Davidson going as far as to say of Navy Federal that while its commercials are so effective and sincere, “you’d never know it’s an operation marked by mendacity, sham and deceit.”
Davidson said consumers should not be “suckered in” by the Navy FCU TV ad that shows a “cute little Pomeranian kissing the big gruff Marine,” and in his report outlined the reasons Navy FCU signed the consent order including “violating the law by blocking debit cards, ATM machines and online accounts, and making empty threats to contact clients’ military superiors about overdue debts. The credit union also intimidated customers with false threats to garnish wages.”
“The only thing worse than an empty threat is a real one,” Davidson wrote. “But empty threats can take a toll, too, generating tension, stress and fear. Not all the threats were bogus, however. The credit union disabled electronic access for about 700,000 accounts after customers fell behind on credit payments.”
Davidson called the press release Navy Federal issued in response “self serving.”
“We have a long history of helping members when they are making the effort to pay back their loans, and we will continue to do so,” the press release states. “Where our Collections practices have come up short in the Consumer Financial Protection Bureau’s estimation, we have made all the necessary changes.”
For the specific violations identified by the CFPB, go here.