It’s been three years since five service members accused USAA Federal Savings Bank of violating legal protections aimed at members of the armed forces and charging “useless” or baseless fees, and a $64 million class action settlement has finally been reached.
This settlement will benefit approximately 210,000 military clients and the attorneys who represented the plaintiffs in the class action. In the legal process, which began in 2021, in the midst of the coronavirus pandemic, he concluded with an economic agreement that reflects the importance of the case.
$64 Million for 210,000 Military Customers Affected by USAA
According to information published by US media and portals specializing in class action lawsuits, USAA officials have reached an agreement that will distribute millions of dollars among those affected. The four main plaintiffs, who are Philip Bulls, Dean Brink, Carmin Nowlin, Nicholas Prado and Raphael Riley, will each receive $20,000, representing significant compensation for the allegations they have sustained for years.
The settlement has also been a financial victory for the lawyers who brought the case, with the firms Zaytoun, Ballew & Taylor in North Carolina and Smith & Lowney in Washington claiming up to 27.5% of the total settlement, representing a hefty sum of $17.7 million. Despite this payment, USAA has maintained its position of innocence, arguing that the accusations are baseless and that the settlement is simply a means to avoid an expensive and protracted legal battle.
Class Action Lawsuit Filed by Military Accusing Bank of Violating Legal Protections and Charging Improper Fees
“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.
“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.”
Are You or Were You a USAA Customer? You Could Claim a Payment From the Class Action Settlement
The class-action lawsuit was filed following several years of remediation orders that were issued by the U.S. Treasury Department and the Office of the Comptroller of the Currency.
These instances in 2019 and 2020 ordered USAA to send checks to members of the armed forces affected by violations of the Military Loan Act (MLA) and the Servicemembers Civil Relief Act (SCRA). In response, the bank issued hundreds of thousands of checks with significant sums.
The SCRA is designed to protect troops from excessive financial burdens while serving the U.S. Military: it suspends, reduces, or postpones obligations such as loans, rent, or insurance costs under certain circumstances.
However, the plaintiffs argued that these did not adequately cover the losses suffered by the customers. In addition, some checks could not be cashed or were apparently discarded as spam.
Violations Allegedly Committed by USAA
The U.S. Treasury Department’s Office of the Comptroller of the Currency found 546 SCRA violations and 54 Military Loan Act violations during a March 2019 performance evaluation.
The plaintiffs also claim that USAA did not reduce interest rates, as required by law after the MLA and SCRA ordinances. He also did not forgive certain interests and charges, which aggravated the financial losses of the plaintiffs.
Despite these accusations, USAA offered a 4% interest rate to the lead plaintiffs, arguing that it was outside of what was required by law. You can read the full text of the lawsuit here.