Consumer complaint received 2020-03-10
Company: UNITED SERVICES AUTOMOBILE ASSOCIATION
State: MO
Product: Checking or savings account
Sub-product: Checking account
Issue: Managing an account
Sub-issue: Deposits and withdrawals

Complaint:
In response to your answers dated ; XX/XX/XXXX, and XX/XX/XXXX. USAA stated that you followed 31 CFR 212.4 ( b ) to garnish/ levy . USSA responded that it had received a notice to levy Dated XX/XX/XXXX and was applying 31 CFR 212.4 ( b ) as a means of following the Florida Department of Revenues ( FDR ) request for action. 
USAA stated XX/XX/XXXX : It is important to note that both documents contained a Notice of Right to Garnish statement, which made your VA XXXX funds eligible to pay the owed child support. According to 31 CFR 212.4 ( b ), Initial action upon receipt of a garnishment order. ( b ) Notice of Right to Garnish Federal Benefits is attached to or included with the order. If a Notice of Right to Garnish Federal Benefits is attached to or included with the garnishment order, then the financial institution shall follow its otherwise customary procedures for handling the order and shall not follow the procedures in 212.5 and 212.6. Additionally, according to the Depository Agreement and Disclosures, which governs FSB  deposit accounts, Any garnishment, attachment or other levy against an account is subject to FSBs  right of setoff and any security interest FSB  has in the account. You agree that FSB may, without prior notice or demand, apply or setoff the funds in your account ( and accounts you own with others ) at any time to pay any debt, whether direct or indirect, that you have with FSB, and/or any fees or service charges owed to FSB. You expressly agree that such rights extend to any Federal or state benefit payments ( including without limitation Social Security benefits ) electronically deposited into your account. 

USAAs depository clearly states : Setoff and Security Interest You agree that FSB may, without prior notice or demand, apply or setoff the funds in your account ( and accounts you own with others ) at any time to pay any debt, whether direct or indirect, that you have with FSB, and/or any fees or service charges owed to FSB. In addition to its rights under the law ( called setoff ), you grant FSB a security interest in each account to secure such debt, as it may arise. This provision does not apply if the debt is created under any consumer credit plan accessed by a credit card. FSB is not liable to you for dishonoring items where withdrawals described in this section result in insufficient funds in your account. 
To the extent permitted by law, FSB may, in its sole discretion, setoff funds from any new account you open to pay any debt, whether direct or indirect, that you have with FSB, and/or any fees or service charges owed to FSB. 
You expressly agree that such rights extend to any Federal or state benefit payments ( including without limitation Social Security benefits ) electronically deposited into your account. You understand and agree that if you do not want your benefits applied in this way, you may change your direct deposit instructions to the benefits payor at any time. 
While the depository agreement states, rights under the law, and to the extent permitted by law. Im going to refer to 31 CFR 212 which both USAA and I agree governs this matter. ( called the law ). 

212.4 Initial action upon receipt of a garnishment order. 
( a ) Examination of order for Notice of Right to Garnish Federal Benefits. Prior to taking any other action related to a garnishment order issued against a debtor, and no later than two business days following receipt of the order, a financial institution shall examine the order to determine if the United States or a State child support enforcement agency has attached or included a Notice of Right to Garnish Federal Benefits, as set forth in Appendix B to this part. 
( b ) Notice of Right to Garnish Federal Benefits is attached to or included with the order. If a Notice of Right to Garnish Federal Benefits is attached to or included with the garnishment order, then the financial institution shall follow its otherwise customary procedures for handling the order and shall not follow the procedures in 212.5 and 212.6.

( c ) No Notice of Right to Garnish Federal Benefits. If a Notice of Right to Garnish Federal Benefits is not attached to or included with the garnishment order, then the financial institution shall follow the procedures in 212.5 and 212.6. 
To date I have not received a copy of the Notice of Right to Garnish Federal Benefits. I have requested this multiple times, by phone and in writing. Again, I am requesting a copy of this document. 
Therefore, it is critical ; FDR issued a levy that according to USAAs responses dated XX/XX/XXXX and XX/XX/XXXX that was to stay in effect for 60 days. 
If they had truly issued this order with a Notice of Right to Garnish Federal Benefits. Im sure their legal team would be aware that under 31 CFR 212.6 states : 212.6 Rules and procedures to protect benefits. 
The following provisions apply if an account review shows that a benefit agency deposited a benefit payment into an account during the lookback period. 
( a ) Protected amount. The financial institution shall immediately calculate and establish the protected amount for an account. The financial institution shall ensure that the account holder has full and customary access to the protected amount, which the financial institution shall not freeze in response to the garnishment order. An account holder shall have no requirement to assert any right of garnishment exemption prior to accessing the protected amount in the account. 
( b ) Separate protected amounts. The financial institution shall calculate and establish the protected amount separately for each account in the name of an account holder, consistent with the requirements in 212.5 ( f ) to  conduct distinct account reviews. 
( c ) No challenge of protection. A protected amount calculated and established by a financial institution pursuant to this section shall be conclusively considered to be exempt from garnishment under law. 
( d ) Funds in excess of the protected amount. For any funds in an account in excess of the protected amount, the financial institution shall follow its otherwise customary procedures for handling garnishment orders, including the freezing of funds, but consistent with paragraphs ( f ) and ( g ) of this section. 
( e ) Notice. The financial institution shall issue a notice to the account holder named in the garnishment order, in accordance with 212.7. 
( f ) One-time account review process. The financial institution shall perform the account review only one time upon the first service of a given garnishment order. The financial institution shall not repeat the account review or take any other action related to the order if the same order is subsequently served again upon the financial institution. If the financial institution is subsequently served a new or different garnishment order against the same account holder, the financial institution shall perform a separate and new account review. 
( g ) No continuing or periodic garnishment responsibilities. The financial institution shall not continually garnish amounts deposited or credited to the account following the date of account review, and shall take no action to freeze any funds subsequently deposited or credited, unless the institution is served with a new or different garnishment order, consistent with the requirements of this part. 
( h ) Impermissible garnishment fee. The financial institution may not charge or collect a garnishment fee against a protected amount. The financial institution may charge or collect a garnishment fee up to five business days after the account review if funds other than a benefit payment are deposited to the account within this period, provided that the fee may not exceed the amount of the non-benefit deposited funds. 
[ 76 FR 9955, XX/XX/XXXX, as amended at 78 FR 32109, XX/XX/XXXX ] To Sum This All Up : A. USAA Received a notice of Levy XX/XX/XXXX that was to stay in effect for 60 days. 
B. XXXX XXXX the required review was done. Which went back to XX/XX/XXXX. 
C. XX/XX/XXXX Department of Veterans Affairs direct deposits Compensation XXXX payment of {$6100.00}. Twenty-two days after the review was completed. 
XXXX. XX/XX/XXXX FDR submits to USAA a release of funds letter. 
E. XX/XX/XXXX USAA releases my funds deposited F. XX/XX/XXXX USAA freezes my funds again. CSRs state they received another levy notice. I have never received any such notice. 
G. XX/XX/XXXX USAA issues check to FDR in amount of {$5500.00}. 

Discrepancies : A. Levy staying in effect for 60 days. Violates 31 CFR 212. 
B. Review completed XX/XX/XXXX. 31 CFR 212.6 ( f ) states one-time review. 
C. 31 CFR 212.6 ( g ) states that No continuing or periodic garnishment responsibilities. The financial institution shall not continually garnish amounts deposited or credited to the account following the date of account review, and shall take no action to freeze any funds subsequently deposited or credited, unless the institution is served with a new or different garnishment order, consistent with the requirements of this part. 
D. Freezing deposit on XX/XX/XXXX would constitute a Violation of 31 CFR 212.6 by continuing to garnish/ levy funds 22 days after account review. 
E. XX/XX/XXXX funds were cleared by release letter dated XX/XX/XXXX from FDR. Who recognized that they had no right to funds deposited under 38 U.S.C 5301. they had not petitioned the VA to attach benefits. 
F. Refreezing funds in my account XX/XX/XXXX. Violates 31 CFR 212, 38 U.S.C 5301, without receiving a new order of garnishment. 
G. Issuing a check to FDR on XX/XX/XXXX Violates 31 CFR 212, 38 U.S.C 5301. 
H. USAA Depository Agreement refers to actions taken under Federal laws, which I clearly has violated with the handling of this

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation