Consumer complaint received 2023-07-25
Company: NAVY FEDERAL CREDIT UNION
State: TX
Product: Debt collection
Sub-product: Credit card debt
Issue: False statements or representation
Sub-issue: Attempted to collect wrong amount

Complaint:
Navy Federal Credit Union terminated my consumer account with a balance of XXXX remaining that I have since requested payment for. Navy Federal keeps attempting to collect XXXX from me which is a violation of federal law. 

Navy Federal Credit Union and it's subsidiary were notified via registered mail that I would like to redeem my payment and securities. 

12 CFR 1026.11 - Treatment of credit balances ; account termination. 1026.11 Treatment of credit balances ; account termination.

( a ) Credit balances. When a credit balance in excess of {$1.00} is created on a credit account ( through transmittal of funds to a creditor in excess of the total balance due on an account, through rebates of unearned finance charges or insurance premiums, or through amounts otherwise owed to or held for the benefit of the consumer ), the creditor shall : ( 1 ) Credit the amount of the credit balance to the consumer 's account ; ( 2 ) Refund any part of the remaining credit balance within seven business days from receipt of a written request from the consumer ; ( 3 ) Make a good faith effort to refund to the consumer by cash, check, or money order, or credit to a deposit account of the consumer, any part of the credit balance remaining in the account for more than six months. No further action is required if the consumer 's current location is not known to the creditor and can not be traced through the consumer 's last known address or telephone number.

( b ) Account termination.

( 1 ) A creditor shall not terminate an account prior to its expiration date solely because the consumer does not incur a finance charge.

( 2 ) Nothing in paragraph ( b ) ( 1 ) of this section prohibits a creditor from terminating an account that is inactive for three or more consecutive months. An account is inactive for purposes of this paragraph if no credit has been extended ( such as by purchase, cash advance or balance transfer ) and if the account has no outstanding balance.

( c ) Timely settlement of estate debts ( 1 ) General rule.

( i ) Reasonable policies and procedures required. For credit card accounts under an open-end ( not home-secured ) consumer credit plan, card issuers must adopt reasonable written policies and procedures designed to ensure that an administrator of an estate of a deceased accountholder can determine the amount of and pay any balance on the account in a timely manner.

( ii ) Application to joint accounts. Paragraph ( c ) of this section does not apply to the account of a deceased consumer if a joint accountholder remains on the account.

( 2 ) Timely statement of balance ( i ) Requirement. Upon request by the administrator of an estate, a card issuer must provide the administrator with the amount of the balance on a deceased consumer 's account in a timely manner.

( ii ) Safe harbor. For purposes of paragraph ( c ) ( 2 ) ( i ) of this section, providing the amount of the balance on the account within 30 days of receiving the request is deemed to be timely.

( 3 ) Limitations after receipt of request from administrator ( i ) Limitation on fees and increases in annual percentage rates. After receiving a request from the administrator of an estate for the amount of the balance on a deceased consumer 's account, a card issuer must not impose any fees on the account ( such as a late fee, annual fee, or over-the-limit fee ) or increase any annual percentage rate, except as provided by 1026.55 ( b ) ( 2 ).

( ii ) Limitation on trailing or residual interest. A card issuer must waive or rebate any additional finance charge due to a periodic interest rate if payment in full of the balance disclosed pursuant to paragraph ( c ) ( 2 ) of this section is received within 30 days after disclosure.

1026.11 Treatment of credit balances ; account termination.

( a ) Credit balances. When a credit balance in excess of {$1.00} is created on a credit account ( through transmittal of funds to a creditor in excess of the total balance due on an account, through rebates of unearned finance charges or insurance premiums, or through amounts otherwise owed to or held for the benefit of the consumer ), the creditor shall : ( 1 ) Credit the amount of the credit balance to the consumer 's account ; ( 2 ) Refund any part of the remaining credit balance within seven business days from receipt of a written request from the consumer ; ( 3 ) Make a good faith effort to refund to the consumer by cash, check, or money order, or credit to a deposit account of the consumer, any part of the credit balance remaining in the account for more than six months. No further action is required if the consumer 's current location is not known to the creditor and can not be traced through the consumer 's last known address or telephone number.

1026.12 Special credit card provisions.

( a ) Issuance of credit cards. Regardless of the purpose for which a credit card is to be used, including business, commercial, or agricultural use, no credit card shall be issued to any person except : ( 1 ) In response to an oral or written request or application for the card; or ( 2 ) As a renewal of, or substitute for, an accepted credit card.

( b ) Liability of cardholder for unauthorized use ( 1 ) ( i ) Definition of unauthorized use. For purposes of this section, the term unauthorized use means the use of a credit card by a person, other than the cardholder, who does not have actual, implied, or apparent authority for such use, and from which the cardholder receives no benefit.

( ii ) Limitation on amount. The liability of a cardholder for unauthorized use of a credit card shall not exceed the lesser of {$50.00} or the amount of money, property, labor, or services obtained by the unauthorized use before notification to the card issuer under paragraph ( b ) ( 3 ) of this section.

( 2 ) Conditions of liability. A cardholder shall be liable for unauthorized use of a credit card only if : ( i ) The credit card is an accepted credit card ; ( ii ) The card issuer has provided adequate notice of the cardholder 's maximum potential liability and of means by which the card issuer may be notified of loss or theft of the card. The notice shall state that the cardholder 's liability shall not exceed {$50.00} ( or any lesser amount ) and that the cardholder may give oral or written notification, and shall describe a means of notification ( for example, a telephone number, an address, or both ) ; and ( iii ) The card issuer has provided a means to identify the cardholder on the account or the authorized user of the card.

( 3 ) Notification to card issuer. Notification to a card issuer is given when steps have been taken as may be reasonably required in the ordinary course of business to provide the card issuer with the pertinent information about the loss, theft, or possible unauthorized use of a credit card, regardless of whether any particular officer, employee, or agent of the card issuer does, in fact, receive the information. Notification may be given, at the option of the person giving it, in person, by telephone, or in writing. Notification in writing is considered given at the time of receipt or, whether or not received, at the expiration of the time ordinarily required for transmission, whichever is earlier.

( 4 ) Effect of other applicable law or agreement. If state law or an agreement between a cardholder and the card issuer imposes lesser liability than that provided in this paragraph, the lesser liability shall govern.

( 5 ) Business use of credit cards. If 10 or more credit cards are issued by one card issuer for use by the employees of an organization, this section does not prohibit the card issuer and the organization from agreeing to liability for unauthorized use without regard to this section. However, liability for unauthorized use may be imposed on an employee of the organization, by either the card issuer or the organization, only in accordance with this section.

( c ) Right of cardholder to assert claims or defenses against card issuer ( 1 ) General rule. When a person who honors a credit card fails to resolve satisfactorily a dispute as to property or services purchased with the credit card in a consumer credit transaction, the cardholder may assert against the card issuer all claims ( other than tort claims ) and defenses arising out of the transaction and relating to the failure to resolve the dispute. The cardholder may withhold payment up to the amount of credit outstanding for the property or services that gave rise to the dispute and any finance or other charges imposed on that amount.

( 2 ) Adverse credit reports prohibited. If, in accordance with paragraph ( c ) ( 1 ) of this section, the cardholder withholds payment of the amount of credit outstanding for the disputed transaction, the card issuer shall not report that amount as delinquent until the dispute is settled or judgment is rendered.

( 3 ) Limitations ( i ) General. The rights stated in paragraphs ( c ) ( 1 ) and ( c ) ( 2 ) of this section apply only if : ( A ) The cardholder has made a good faith attempt to resolve the dispute with the person honoring the credit card ; and ( B ) The amount of credit extended to obtain the property or services that result in the assertion of the claim or defense by the cardholder exceeds {$50.00}, and the disputed transaction occurred in the same state as the cardholder 's current designated address or, if not within the same state, within 100 miles from that address.

( ii ) Exclusion. The limitations stated in paragraph ( c ) ( 3 ) ( i ) ( B ) of this section shall not apply when the person honoring the credit card : ( A ) Is the same person as the card issuer ; ( B ) Is controlled by the card issuer directly or indirectly ; ( C ) Is under the direct or indirect control of a third person that also directly or indirectly controls the card issuer ; ( D ) Controls the card issuer directly or indirectly ; ( E ) Is a franchised dealer in the card issuer 's products or services ; or ( F ) Has obtained the order for the disputed transaction through a mail solicitation made or participated in by the card issuer.

( d ) Offsets by card issuer prohibited ( 1 ) General rule. A card issuer may not take any action, either before or after termination of credit card privileges, to offset a cardholder 's indebtedness arising from a consumer credit transaction under the relevant credit card plan against funds of the cardholder held on deposit with the card issuer.

( 2 ) Rights of the card issuer. This paragraph ( d ) does not alter or affect the right of a card issuer acting under state or Federal law to do any of the following with regard to funds of a cardholder held on deposit with the card issuer if the same procedure is constitutionally available to creditors generally : Obtain or enforce a consensual security interest in the funds ; attach or otherwise levy upon the funds ; or obtain or enforce a court order relating to the funds.

( 3 ) Periodic deductions.

( i ) This paragraph ( d ) does not prohibit a plan, if authorized in writing by the cardholder, under which the card issuer may periodically deduct all or part of the cardholder 's credit card debt from a deposit account held with the card issuer ( subject to the limitations in 1026.13 ( d ) ( 1 ) ).

( ii ) With respect to a covered separate credit feature accessible by a hybrid prepaid-credit card as defined in 1026.61, for purposes of this paragraph ( d ) ( 3 ), periodically means no more frequently than once per calendar month, such as on a monthly due date disclosed on the applicable periodic statement in accordance with the requirements of 1026.7 ( b ) ( 11 ) ( i ) ( A ) or on an earlier date in each calendar month in accordance with a written authorization signed by the consumer.

( e ) Prompt notification of returns and crediting of refunds.

( 1 ) When a creditor other than the card issuer accepts the return of property or forgives a debt for services that is to be reflected as a credit to the consumer 's credit card account, that creditor shall, within 7 business days from accepting the return or forgiving the debt, transmit a credit statement to the card issuer through the card issuer 's normal channels for credit statements.

( 2 ) The card issuer shall, within 3 business days from receipt of a credit statement, credit the consumer 's account with the amount of the refund.

( 3 ) If a creditor other than a card issuer routinely gives cash refunds to consumers paying in cash, the creditor shall also give credit or cash refunds to consumers using credit cards, unless it discloses at the time the transaction is consummated that credit or cash refunds for returns are not given. This section does not require refunds for returns nor does it prohibit refunds in kind.

( f ) Discounts ; tie-in arrangements. No card issuer may, by contract or otherwise : ( 1 ) Prohibit any person who honors a credit card from offering a discount to a consumer to induce the consumer to pay by cash, check, or similar means rather than by use of a credit card or its underlying account for the purchase of property or services; or ( 2 ) Require any person who honors the card issuer 's credit card to open or maintain any account or obtain any other service not essential to the operation of the credit card plan from the card issuer or any other person, as a condition of participation in a credit card plan. If maintenance of an account for clearing purposes is determined to be essential to the operation of the credit card plan, it may be required only if no service charges or minimum balance requirements are imposed.

( g ) Relation to Electronic Fund Transfer Act and Regulation E. For guidance on whether Regulation Z ( 12 CFR part 1026 ) or Regulation E ( 12 CFR part 1005 ) applies in instances involving both credit and electronic fund transfer aspects, refer to Regulation E, 12 CFR 1005.12 ( a ) regarding issuance and liability for unauthorized use. On matters other than issuance and liability, this section applies to the credit aspects of combined credit/electronic fund transfer transactions, as applicable.

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