Feds hit Navy Federal Credit Union with $28M fine

The Obama administration is accusing the nation’s largest credit union of improperly threatening members of the military who were behind on their loan payments.

The Consumer Financial Protection Bureau (CFPB) on Tuesday ordered Navy Federal Credit Union to pay $28.5 million, most of which will go to the members of the military and veterans to whom they provide banking services.

The credit union warned delinquent customers it would sue them and garnish their wages if they didn’t pay up, even though it had no intention of following through with the threats, the agency claims.

That wasn’t the end of the threats.

"The credit union sent letters to dozens of service members  threatening that the credit union would contact their commanding officers if they did not promptly make a payment,” the CFPB said. "The credit union’s representatives also communicated these threats by telephone.

"For members of the military, consumer credit problems can result in disciplinary proceedings or lead to revocation of a security clearance,” the agency explained.

The credit union also blocked the servicemembers from checking their bank accounts online and using their debit cards until they paid their bills, according to the CFPB.

The CFPB says the violations occurred between 2013 and 2015. 

The credit union has been ordered to pay $23 million to the customers who were affected, along with a $5.5 million fine to the CFPB.