{"id":67228,"date":"2016-10-12T16:24:52","date_gmt":"2016-10-12T16:24:52","guid":{"rendered":"https:\/\/one.sightlinemg.com\/navytimes\/uncategorized\/2016\/10\/12\/navy-federal-customers-to-receive-23-million-for-alleged-improper-debt-collection\/"},"modified":"2026-08-08T13:51:22","modified_gmt":"2026-08-08T13:51:22","slug":"navy-federal-customers-to-receive-23-million-for-alleged-improper-debt-collection","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/navytimes\/management\/pay-benefits\/2016\/10\/12\/navy-federal-customers-to-receive-23-million-for-alleged-improper-debt-collection\/","title":{"rendered":"Navy Federal customers to receive $23 million for alleged ‘improper debt collection’"},"content":{"rendered":"\n

A federal regulator has ordered Navy Federal Credit Union to pay $23 million to hundreds of thousands of its customers, accusing the credit union of allegedly making false threats about debt collection.\u00a0 <\/p>\n\n\n\n

“Navy Federal Credit Union misled its members about its debt collection practices and froze consumers out from their own accounts,” said Richard Cordray, director of the Consumer Financial Protection Bureau, in a Tuesday statement announcing the bureau’s action. “Financial institutions have a right to collect money that is due to them, but they must comply with federal laws as they do so.”\u00a0 <\/p>\n\n\n\n

Hundreds of thousands of consumers were affected by the practices between January 2013 and July 2015, according to the CFPB statement. In addition to paying $23 million in compensation to consumers, the credit union must correct its collection practices and pay $5.5 million to the Consumer Financial Protection Bureau’s civil penalty fund. <\/p>\n\n\n\n

CFPB officials alleged that Navy Federal violated federal law by making “deceptive representations” to consumers about its intentions regarding legal action, wage garnishment and contacting their chain of command. Records show the credit union rarely took these actions and lacked the legal authority to follow through on some of the threats, CFPB said. <\/p>\n\n\n\n\n\n

CFPB also alleged Navy Federal misrepresented the effect of delinquency on consumers\u2019 credit ratings, and that the credit union violated\u00a0the Consumer Financial Protection Act by unfairly restricting consumers\u2019 electronic account access.<\/p>\n\n\n\n

Navy Federal officials agreed to the settlement without admitting or denying the allegations, according to the consent order.<\/p>\n\n\n\n

Navy Federal officials said in a statement that “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.” <\/p>\n\n\n\n

As a not-for-profit cooperative, officials said, “when we make loans, we are lending our members’ money. 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. This is part of our duty to our membership as a whole.”\u00a0 Chain-of-command concerns<\/b> <\/p>\n\n\n\n

Navy Federal’s “message to the consumer of \u2018pay or be sued\u2019 was inaccurate about 97 percent of the time,” according to the CFPB announcement, “even among consumers who did not make a payment in response to the letters.”<\/p>\n\n\n\n

According to the consent order, the credit union also allegedly:<\/p>\n\n\n\n