After reading the Consumer Financial Protection Bureau's enforcement order against Navy Federal Credit Union, the enforcement order left numerous unanswered questions about Navy's improper debt collection practices.
It is hard to believe that low level collection staff did this on their own. Therefore, who was responsible for the decision to implement these improper collection practices?
According to the enforcement order, Navy illegally froze electronic account access and services for about 700,000 accounts after members became delinquent on loans and did not provide adequate notice about the impending electronic account freeze. Who ordered shutting off delinquent members electronic access to their accounts?
Navy sent form letters to delinquent members threatening legal action, wage garnishment, and to contact servicemembers commanding officers. Did Navy's compliance staff review the threatening form letters that were sent out by the credit union? If not, why not?
Did Navy's collection department have an incentive pay program that could have contributed to this bad behavior by collection department employees?
Did managers pressure front line collection staff to engage in improper collection practices?
When was Navy FCU's senior management and board of directors made aware of the improper debt collection practices? The same question should be asked to the credit union's supervisory committee?
How many employees have been disciplined, reprimanded, or subject to additional training for disclosing debts to third parties or making threats Navy Federal could not legally take or did not intend to take?
Has Navy FCU terminated any managers who were involved in these improper debt collection practices?
Were these abusive debt collection practices in place before January 1, 2013? If so, how long have these practices been going on?
The Office of the Comptroller of the Currency issued a consent order against Wells Fargo at the same time the Consumer Financial Protection Bureau issued its enforcement order. Why didn't the National Credit Union Administration (NCUA), the primary safety and soundness regulator of Navy, issue a consent order against Navy FCU at the same time the Consumer Financial Protection Bureau issued its enforcement order?
Were these abusive practices occurring when Navy FCU was under NCUA oversight? If yes, why didn't NCUA address the issue?
Hopefully when Congress returns to town after the election, it will investigate Navy FCU's improper debt collection practices and get to the bottom of these questions and more. It is important for Congress to investigate because Congress provides Navy FCU a significant benefit via its exemption from the federal corporate income tax.
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When it comes to debit card access to accounts, it is my understanding that many credit unions automatically restrict account access by debit card when there is a delinquent loan. While members can still make in-person withdrawals and checks/ach will clear, the debit card will not work. Credit unions justify this as a limitation of other services for members not in good standing in their account agreement. A sample of this would be:
ReplyDeleteAccount services are available to those members in good standing with the Credit Union. We reserve the right to cancel or suspend services to a member who is not in good standing, which includes members that have (a) a delinquent loan; (b) a Share Account balance below the $5.00 minimum; (c) an unresolved deposited returned Check; (d) any unpaid and uncollected fees; (e) a negative balance on an Account; or (f) caused a financial loss to the Credit Union.