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CFPB Fines USAA $15.5 Million For Stop Payment Issues

The Consumer Financial Protection Bureau assessed $15.5 million in fines and penalties against USAA Federal Savings Bank yesterday for allegedly failing to honor requests from customers to stop payments on preauthorized electronic funds transfers and failing to initiate and complete error resolution investigations.

It was the agency’s first public enforcement action under new Director Kathleen Kraninger, although the investigation and action was likely initiated under former Acting Director Mick Mulvaney.

USAA will pay $12 million in restitution to individuals and pay a $3.5 million civil money penalty fine, according to the CFPB.

Rather than granting requests from customers to stop payments on preauthorized electronic funds transfers, to pay bills or repay payday loans in many cases, USAA either failed to stop the payments or required the customers to notify merchants as a prerequisite. The organization also failed to honor stop payment requests that were made orally by consumers. USAA also lacked a mechanism to stop payment of preauthorized electronic transfers that were processed via a debit card. The CFPB also found lax policies and procedures related to USAA’s investigations of disputes related to preauthorized electronic funds transfers. For example, individuals contesting a payment with a payday lender were required to get some forms notarized before submitting them to the bank.

It should be noted that many of the allegations made against USAA occurred prior to 2015.

Along with paying the fines, USAA must revamp its policies and procedures related to granting stop payment requests on preauthorized electronic funds transfers, according to the consent order.

Many people are going to comb through the consent order to try and assess Kraninger’s prerogatives or style, but it might be too soon to do so. One slightly interesting note is that Kraninger refrained from including a statement in the press release announcing the consent order, much like Mulvaney had done during his tenure as acting director. Former Director Richard Cordray included statements when announcing enforcement actions.

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