December 26, 2024
USAA Federal Savings Bank, a financial institution serving U.S. military members and their families, is under increased scrutiny following recent regulatory actions and customer complaints.
Regulatory Action
On December 18, 2024, the U.S. Office of the Comptroller of the Currency (OCC) mandated that USAA Federal Savings Bank address several longstanding regulatory deficiencies and unsafe practices. These issues span management, earnings, information technology, consumer compliance, internal audit, and suspicious activity reporting violations, some of which have been identified since at least 2019. The OCC's directive includes parts of previous orders from 2019 and 2022 that have not been fully complied with and mandates the bank to enhance its management of compliance, fraud, and third-party risks, as well as its risk governance. The order also restricts the bank from introducing certain new products and services. USAA has stated it is working to resolve the identified problems and noted its credit ratings, capital, and liquidity are substantially above regulatory requirements.
Customer Complaints
In addition to regulatory challenges, USAA has faced customer complaints regarding fraud and account security. A growing number of members have reported losing thousands of dollars due to bank fraud, with the bank often blaming them for the losses. Customers have recounted witnessing fraudulent activity on their accounts in real-time, only to have their claims dismissed by the bank, leaving them responsible for the financial losses. Notably, Curtis Murrah lost over $14,000 while USAA maintained there was no fraud. Despite the bank's claim of having "sophisticated fraud monitoring detection processes," members have faced significant financial and emotional hardships.
Legal Settlements
USAA has also been involved in legal settlements related to its financial practices. In August 2024, the company agreed to pay $62.4 million to settle a lawsuit alleging it overcharged service members and veterans on interest rates and fees. The lawsuit claimed USAA violated the Servicemembers Civil Relief Act, Military Lending Act, and Truth in Lending Act by not capping interest rates at 6% during active duty and not permanently forgiving interest above this rate. USAA, which denies wrongdoing, stated the settlement helps avoid costly litigation and noted it generally charges lower interest rates than legally required.
Conclusion
These developments highlight ongoing challenges for USAA as it navigates regulatory scrutiny, customer dissatisfaction, and legal disputes. The bank's response to these issues will be crucial in determining its future standing within the financial services industry.