Consumer complaint received 2025-02-19 00:00:00
Product: Checking or savings account — Checking account
Issue: Managing an account — Deposits and withdrawals
Company: NAVY FEDERAL CREDIT UNION
State: NY

Complaint narrative:
Complainant : XXXX XXXX XXXXXXXX XXXX Email : XXXX Phone : ( XXXX ) XXXX Date : XX/XX/2025 Subject : Unauthorized Withdrawal of {$2400.00} from Joint Checking Account by Navy Federal Credit Union Description of the Issue : On XX/XX/2025, my wife, XXXX XXXX, and I, both secured parties with XXXX filings, received a transfer and deposit of {$5000.00} into our joint checking account at Navy Federal Credit Union ( NFCU ). This deposit was intended to cover essential obligations, including our NFCU car loan and other critical bills. While initial payments were successfully processed, later that same day, we noticed an " Adjustment '' transaction in our account, indicating a withdrawal of {$2400.00}. 

Upon contacting NFCU 's customer service, we were informed that these funds were seized to offset a charged-off credit card debt. They claimed this action was outlined in their disclosure. However, they also mentioned that their disclosure provides an option to opt out of such seizures. This critical information was not clearly communicated to us; had it been, we would have exercised our right to opt out, preventing NFCU from unilaterally seizing our funds without prior notification or warning. 

Violations and Legal Concerns : Right of Offset Misapplication : While financial institutions may have a right of offset, its application must adhere to specific conditions. According to the Consumer Financial Protection Bureau 's Regulation P, institutions are required to provide a clear and conspicuous notice to consumers regarding their right to opt out of certain practices. NFCU 's failure to clearly inform us of our opt-out rights constitutes a violation of these regulations. 

Breach of Contract : The unilateral withdrawal of funds without prior notification or consent constitutes a breach of the account agreement and a violation of our consumer rights. 

Violation of XXXX Rights : As secured parties with XXXX filings, we have specific protections under the Uniform Commercial Code. NFCU 's unauthorized action infringes upon these rights, undermining the legal protections afforded to us. 

Misclassification of Charged-Off Debt : According to the Internal Revenue Service ( IRS ) , when a debt is canceled, forgiven, or discharged, the amount of the canceled debt is generally considered taxable income to the debtor, and the creditor is typically required to report this cancellation to the IRS using Form 1099-C. If NFCU has charged off the debt and seized funds without proper notification and reporting, they are in violation of IRS regulations as well as other banking and consumer protection laws.

Requested Resolution : Immediate Reimbursement : We demand the prompt return of the {$2400.00} unlawfully taken from our account.

Policy Review and Amendment : NFCU should review and amend its policies to ensure that any future exercises of the right of offset are conducted in full compliance with legal standards, including providing clear and conspicuous opt-out notices to account holders.

Compensation for Damages : Due to the financial hardship and emotional distress caused by this unauthorized action, we seek compensation for actual damages incurred and for the mental anguish experienced.

Supporting Documentation : Proof of Transaction : Attached is evidence of the {$2400.00} " Adjustment '' transaction from our checking account.

We trust that the Consumer Financial Protection Bureau will investigate this matter thoroughly and ensure that NFCU rectifies this situation promptly. 

Sincerely, XXXX & XXXX XXXX Email : XXXX Phone : ( XXXX ) XXXX

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