Scott Ball / Rivard Report
USAA Federal Savings Bank will pay $15.5 million in a settlement with the Consumer Financial Protection Bureau (CFPB), which charged the San Antonio-based financial institution with violating banking and consumer protection laws.
A consent order released Wednesday by the CFPB outlined violations by USAA of the Electronic Fund Transfer Act and the Consumer Financial Protection Act of 2010. USAA agreed to pay $3.5 million in a civil penalty and $12 million in restitution for those violations deemed “unfair acts or practices,” in the consent order.
The CFPB said USAA failed to stop preauthorized electronic fund transfers and denied customers a “reasonable error resolution investigation.” The consent order states the bank reopened 16,980 closed accounts between July 2011 and November 2016 without permission from customers and more than 5,100 of those accounts incurred fees.
The consent order noted that USAA’s practice of reopening accounts without permission from owners “caused substantial injury to consumers.”
“USAA has been proactively addressing these issues for more than a year and most are resolved,” USAA said in a statement. “In 2017, we began providing restitution payments to some affected members and improved our procedures.
“None of the issues reflect an intention to take advantage of our members. In fact, we believed our processes would help resolve matters faster. We take responsibility for this situation.”
The CFPB also said that prior to 2015, USAA failed to stop preauthorized electronic fund transfers after members had requested those stopped payments.
USAA has 60 days to submit a comprehensive compliance plan, according to the consent order, to address the issues within the settlement, including stop payment procedures, error resolution, and account reopening procedures. The CFPB ordered USAA to take more than 20 corrective actions including granting “stop payment requests to all consumers who contact the Bank seeking to stop payment on future Preauthorized EFTs within three business days of the EFT.”