USAA has agreed to shell out a whopping $64.2 million to settle a class action lawsuit that accused the bank of overcharging thousands of military personnel who should have been protected by certain interest rate laws.
This settlement, filed last week in federal court, puts an end to the several (not a few, in fact) allegations that USAA violated the Members of the Armed Forces Civil Relief Act and other regulations that protect our braves in uniform.
USAA, based in San Antonio and known for serving military and veterans, denies having done anything wrong, as expected in these types of cases in which companies sued in class actions agree to pay to avoid going to trial but does not accept having committed any wrongful act. That said, about 210,000 people could receive payments if a federal judge in North Carolina approves the settlement.
USAA to Settle Class Action Lawsuit With $64.2 Million
Lawyers representing the plaintiffs say the settlement “deserves court approval” and is similar to other cases in which Bank of America and JPMorgan Chase also settled, albeit for smaller sums – $42 million and $62 million, respectively. Although federal regulators had already forced USAA to send checks to affected customers, the lawyers note that these “reparation payments did not fully compensate” for the dam
ages suffered.
USAA, for its part, assures that it had already corrected the “errors that may have occurred” and that approximately half of the agreement “is simply to reissue checks that we had previously sent and that our members never cashed.” In addition, the bank states that it strongly disagrees with the allegations, but considers this agreement to be in the best interests of its members, allowing them to avoid lengthy and expensive litigation and focus on providing exceptional service.
USAA also boasts of going “beyond the minimum requirements” by offering lower interest rates than required by law. Anyway, it seems that they are trying to put a positive spin on this whole situation.
What the Plaintiffs Who Were Affected by USAA Said
The plaintiffs in this gigantic class action claim that USAA, a bank that presents itself as the military’s best friend, violated its legal and contractual duties by charging exorbitant interest rates and fees, which unduly increased the principal balances of their accounts.
In addition, USAA is accused of having hidden these improper charges from thousands of military families, who did not realize the violation of their rights until 2021, when it sent misleading correspondence and checks to some families.
This prompted the plaintiffs to investigate further, uncovering systematic violations of the Members of the Armed Forces Civil Relief Act and other military benefits, causing harm to thousands of military families.
According to a lawsuit, the U.S. Treasury Department’s Office of the Comptroller of the Currency (OCC) found 546 SCRA and 54 Military Loan Act violations in a March 2019 USAA assessment. The problem? Failing to protect reservists from high fees and improper recovery of vehicles. It’s crazy!
The office ordered the bank to get down to work to correct the tremendous mess it had gotten into. In 2020, they were fined a hefty $85 million for not having an effective program to monitor compliance with the laws. What a headache for the entity and for the affected customers!
Roger Wildermuth, USAA’s head of public relations, said the bank “disagrees” with the charges but that they reached a settlement “for the sake of its members” and to avoid lengthy and costly litigation. According to him, they had already compensated the affected members before the lawsuit and that half of the settlement money is just to re-send checks that were never cashed. What a mess!
