According to the CFPB, the bank snubbed consumers’ request for an investigation into funds that were debited by mistake. The agency, in particular, was focused on the bank’s response to payday loan transfers disputes, and their failing practices.
The CFPB alleged the bank carried out the practice of reopening consumer deposit accounts starting in 2011 until 2016 without any prior notice.
The CFPB said the bank reopened the accounts of 16,980 customers without their permission, which led to more than 5,100 customers incurring about $270,000 in fees. The bank reimbursed them in July 2017.
According to a 39-page consent order, the bank declined requests to stop or correct payday loan payments after customers made the bank aware there were mistakes in their electronic fund transfers (EFT) such as incorrect amounts, unauthorized amounts or were for more than the authorized amount.
The consent order noted until May 2015, USAA would not investigate a report until consumers made a written statement of the situation within 10 days of the consumer being sent a form.
Regulation E demands financial institutions look into suspected mistakes right away and report the investigation results to consumers within 10 days by mail.
According to USAA spokesperson Matt Hartwig, the bank has already made changes to its procedures and compensated some of its customers already. He said the bank wasn’t trying to take advantage of members and has been working hard to take care of the problems for over a year.
When it came to payday loans, the bank would advise consumers to reach out to the payday lender to dispute the transaction. The order noted USAA representatives would not investigate mistakes made by payday loan lenders.
In the CFPB consent order, USAA representatives told consumers that if they found an ACH debit was, in fact, authorized, they would put their memberships in danger. Simply put, consumers would be ineligible to buy any USAA products or any existing USAA accounts could be closed. They also threatened the consumers with a crime, saying they could be jailed up to 30 years and pay a $1 million fine.
USAA requires consumers who want to contest a payday loan debt transmit to give them a notarized written statement, and until that is submitted, the bank won’t investigate the claim.
Learn more about Payday loans in Arkansas and Payday Loans in California.
