The Consumer Financial Protection Bureau this week fined Navy Federal Credit Union $28.5 million over improper debt collection practices, including making false threats and freezing its customers out of their accounts for delinquent loans.
That penalty breaks down into $23 million paid in redress to victims and a $5.5 million civil money penalty.
“Navy Federal Credit Union misled its members about its debt collection practices and froze consumers out from their own accounts,” CFPB Director Richard Cordray said in a statement. “Financial institutions have a right to collect money that is due to them, but they must comply with federal laws as they do so.”
The CFPB said that Navy FCU violated the Dodd-Frank Wall Street Reform and Consumer Protection Act with several of its debt collection practices. Those included falsely threatening legal action and wage garnishment, falsely threatening to contact delinquent members’ commanding officers, misrepresenting the credit consequences of falling behind on loan payments and illegally freezing access to about 700,000 accounts when consumers became delinquent on credit accounts with Navy FCU.
In addition to the monetary penalty, the $73 billion credit union, the largest in the U.S., was also ordered to correct its debt collection practices as part of the enforcement.