What to do when bank is being unfair.

Posted by: Live Smart   
May 4th,
2009

This is going to be our first lesson and by the end I hope we will learn many useful life lessons.

First, you do not have to be rich and have lawyers when you feel that you have been treated unfairly. Below you will see a communication to Navy Federal Credit Union CEO in regards to some very unfair practices. I am sure you know someone or have experienced similar situations yourself. You do not have to take this, you can act and get satisfactory results.

We will be following this story and updating when we get replies. So lets get started, here is the initial letter:

To: Cutler Dawson
President/CEO
Navy Federal Credit Union
P.O. Box 3000,
Merrifield, VA 22119-3000

April 30, 2009

From: US Marine Mom

RE: problems with US Marine checking account # **********

Mr. Dawson

You seem to be very proud of the customer service of Navy Federal Credit Union and you are doing a good job selling this image to your potential customers. When I advised my son, US Marine, to sign up with you, I was very hopeful that my son’s experience with your institution would be very much different that it was with his previous military financial institution: FSNB. Unfortunately he experienced problems very similar to those that made him switch banks in the first place.

Navy Federal likes to portray itself as helping servicemen and women, but instead it is like a wolf in the sheep’s skin; using inside knowledge to make as much profit as it can on the backs of its members: servicemen and women who risk their lives every day in protecting our country.
Here are the two categories of problems that my son has encountered through out his dealings with Navy Federal:

Problem I:

· Navy Federal accepts Debit/Visa charges that result in negative balance in the checking account, hence loaning money to the account holder, then charging illegally enormously high interest rates on those balances. (See table 1 below)

Table 1.: Debit/Visa card transactions resulting in negative balance and illegally high interest charges.

Date

Charge

Account deficit

Fee / interest charge

next paycheck / loan paid

loan # days

Annual loan rate*

Max allowed interest charge **

3/19/2008

$ 91.87

$ 41.76

$ 20.00

3/31/2008

13

1,345%

$ 0.54

3/26/2008

$ 41.15

$ 40.21

$ 20.00

3/31/2008

6

3,026%

$ 0.24

6/4/2008

$ 40.98

$ 9.65

$ 25.00

6/12/2008

9

10,507%

$ 0.09

7/7/2008

$ 160.00

$ 81.57

$ 25.00

7/14/2008

8

1,398%

$ 0.64

7/9/2008

$ 4.28

$ 4.28

$ 25.00

7/14/2008

6

35,533%

$ 0.03

7/9/2008

$ 30.01

$ 30.01

$ 25.00

7/14/2008

6

5,068%

$ 0.18

*Annual loan rate is calculated based on account deficit, fee charged and number of days Nave Federal carried the loan.
** Maximum allowed interest charge is calculated based on The John Warner National Defense Authorization Act (Also referred to as the Talent Amendment, Public Law 109-364), annual interest rate is not to exceed 36%.

· Navy Federal knows when service man get paid, they have incentive (exorbitant fees) to allow charges that result negative balance as they know they are guaranteed payment back at the next payroll date. This is a very low risk – high reward situation for Navy Federal and exactly opposite situation for our serviceman/women.

· As you can see in July 2008, Navy Federal allowed 2 additional charges 3 days after the account became negative, one of them resulting thirty five thousand percent annual interest rate. This is obviously done on purpose so they could charge fees and profit at the expense of my son. Other companies using Visa (Walmart money card for example) track the account balance in real time and do not allow the balance to go negative. For your surprise Mr. Cutler Dawson, Walmart does not charge overdraft fees either. They have an incentive to keep track of the balance. They do not profit from negative balances of their customers like you do.

Mr. Dawson, for the transaction listed in Table 1 Navy federal by law could have charged my son $ 1.71 for the account deficits. Instead it charged $ 140.00. I expect Navy Federal to refund the charges that were over the legally allowed amount – $ 138.29.

Problem II:
· Table 2 shows the most recent incident that “broke the camels back” so to speak and prompted me to seek help.

Table 2.: ACH Funding

Date charge made with NavyCashCard

Date Navy Federal rejected charges

Charge

Account deficit

Fee

Fee as percentage of deficit

3/17/09

4/3/2009

$ 5.00

$ 5.00

$ 25.00

500%

3/17/09

4/3/2009

$ 5.00

$ 5.00

$ 25.00

500%

3/19/09

4/3/2009

$ 5.00

$ 5.00

$ 25.00

500%

3/20/09

4/3/2009

$ 5.00

$ 5.00

$ 25.00

500%

3/20/09

4/3/2009

$ 5.00

$ 5.00

$ 25.00

500%

3/18/09

4/3/2009

$ 10.00

$ 10.00

$ 25.00

250%

3/21/09

4/3/2009

$ 5.00

$ 5.00

$ 25.00

500%

3/22/09

4/3/2009

$ 5.00

$ 5.00

$ 25.00

500%

3/22/09

4/3/2009

$ 5.00

$ 5.00

$ 25.00

500%

· All those charges were made during deployment via ACH Funding to NavyCashCard. During the whole deployment, these same kinds of transactions took 1, maximum 2 days to clear from Navy Federal checking account. As you can see the last transaction was initiated March the 22nd. The NavyCashCard statement shows balance of $ 0.51 as of March 30th 2009, proving that NavyCashCard had requested all the charges in the table above before March the 30th 2009. As of April 1st 2009, the Navy Federal checking account had balance of $ 894.73 This is more than adequate to pay for the $ 50.00 shown above. For some mysterious reason never explained by your customer service, nor management employees, these charges were not paid before April 1st. . Instead, all these charges were processed April 3rd, by some unexplained insider knowledge exactly at the time the account no longer had the sufficient balance. This resulted fees that were in majority 500 percent of account deficit amount, which is equivalent to highway robbery to say the least.

· Our attempts to resolve this issue with Navy Federal personnel on April 9 and 10th were stonewalled. No-one in your company seems to know how the computer (apparently someone to blame) did apply the transactions, requested days before, exactly when the account no longer had sufficient funds. Numerous phone calls later, the only thing we achieved was to change the account number, so that no more charges were to occur and hence no more fees added.

· It is very obvious to us that Navy Federal on purpose did not honor the ACH fund transfer request when posted. Instead waiting for my son’s account to be drawn down. The moment the account did not have enough funds the charges magically appeared and Navy Federal pocketed $ 225.00 for no service.

Mr. Cutler Dawson I expect an apology and the reverse of all fraudulent check return fees.

It is very offensive and disturbing that your institution (a military credit union) pretending to be there to help our military personnel, is in fact taking advantage of them as the lowest lowlife would.

This story will be posted in http://livesmart.banyantree.us/ blog, so that others can learn from it. Any and all follow-up will be posted there as well. I do sincerely hope that these are all only isolated incidents misunderstandings, magically concentrated on one account. I do hope that it is not your company-wide policy, as it appears to be, to systematically and in cold blood fleece the young man and women who sacrifice their lives for our and your country.

Sincerely,

US Marine Mother

CC: House Financial Services Committee; United States Senate Committee on Banking, Housing and Urban Affairs; Federal Reserve; Senator Nelson; Senator Martinez; Congressman Buchanan and President Obama.