SAN ANTONIO–USAA Federal Savings bank has agreed to pay $64-million to approximately 210,000 military customers to settle a class action lawsuit that alleged it violated protections for members of the military and charged “useless” unsubstantiated fees.
The settlement comes five years after the class action suit was filed by five members of the military. The four named plaintiffs – Philip Bulls, Dean Brink, Carmin Nowlin, Nicholas Prado and Raphael Riley – will receive the largest payout of the military men, each receiving a $20,000 settlement, according to the San Antonio Express-News.
The attorneys representing the plaintiffs – lawyers with Zaytoun, Ballew & Taylor in North Carolina and with Smith & Lowney in Washington – may seek up to 27.5% of the $64 million settlement, or $17.7 million across the two firms, according to the report.
USAA said in a statement that it retains its innocence in the settlement and continues to disagree with the accusations made by the plaintiffs in the class action suit.
USAA Responds
USAA officials told the Express-News they have been and continue to be committed to going beyond the minimum requirements set forth by federal acts protecting military servicemembers, and as an example cited USAA’s interest rates, which are lower than those set forth by law.
“Before this lawsuit was filed, we had already compensated members for errors that may have occurred related to the allegations in the lawsuit. Roughly half of the announced settlement amount is simply reissuing checks we had previously mailed that our members never cashed,” USAA Public Relations Director Roger Wildermuth told MySA.com in a statement. “USAA strongly disagrees with the lawsuit allegations, but this settlement is in the best interest of our membership and allows USAA to avoid lengthy and expensive litigation so we can focus on providing exceptional service.”
A Lot of Checks Sent
According to the report, court documents show USAA Bank was ordered to mail out checks to military servicemembers in 2019 and 2020 by the Treasury department and OCC after USAA Bank was found to have violated federal law, including the Military Lending Act and the Servicemembers Civil Relief Act.
“In response to the order, USAA Bank sent out about 150,000 checks for alleged SCRA violations and another 109,000 checks for MLA violations,” MySA.com reported. “Plus, USAA was asked to mail out another 388,000 checks for customers using debt protection services and 212,000 checks for customers using their extended vehicle protection services – it was ruled these services were ‘useless.’
‘Not Enough’
“However, in the lawsuit filed in 2021, the plaintiffs claimed the checks were not enough to fully cover the incurred costs for the banking customers,” the report continued. “They say there was inadequate documentation on how the amounts in the checks were determined and how they properly made up for the financial losses. Further, some claimed the checks weren’t able to be cashed or were tossed because they resembled junk mail. Essentially, USAA offered 4% interest rates to the plaintiffs named in the suit – a competitive rate which USAA officials say was better than those required by federal law for servicemembers.”
Years of Negotiations
The plaintiffs argued, however, that USAA failed to reduce the rate upon active deployment or within a year of deployment, which is required by federal military protections.
The settlement followed years of negotiations, MySA.com added.