Consumer complaint received 2025-01-07 00:00:00
Product: Debt collection — Credit card debt
Issue: Attempts to collect debt not owed — Debt was result of identity theft
Company: NAVY FEDERAL CREDIT UNION
State: SC

Complaint narrative:
I am filing this complaint against Navy Federal Credit Union ( NFCU ) for multiple violations of consumer rights, including egregious violations of the Fair Credit Billing Act ( FCBA ) and Fair Credit Reporting Act ( FCRA ). Specifically, NFCU unlawfully exercised its " right to offset '' by withdrawing {$1900.00} from my checking account on XX/XX/XXXX. This withdrawal pertains to a disputed debt stemming from fraudulent charges that I have reported and which are currently under active investigation. 

Under the FCBA, a creditor like Navy Federal is prohibited from attempting to collect on a debt, including via offset, during the ongoing dispute process. As of today, NFCU has failed to complete a lawful investigation into the fraudulent charges, has failed to provide any proof that I am liable for the disputed charges, and has instead engaged in collection activity that directly violates the consumer protections afforded under federal law. 

On XX/XX/XXXX, XXXX XXXX responded to a CFPB complaint ( Complaint # XXXX ) indicating that it was still in the process of investigating my dispute over XXXX fraudulent charges. In this response, NFCU acknowledged that the investigation is ongoing, and yet, despite this admission, the XXXX XXXX has continued to report these disputed fraudulent charges to the credit bureaus, added unjustified fees and interest to the contested balances, and unlawfully exercised its right to offset. 

According to FCBA 1666, during an open investigation, NFCU is legally prohibited from undertaking any collection activity, which includes : Offsetting funds from my accounts. 
Reporting the fraudulent charges to credit bureaus. 
Adding any fees or interest to the disputed balance. 
Despite these protections, XXXX XXXX has willfully engaged in all of the above actions. Their conduct is not only unlawful, but it has also caused significant financial harm and distress. Their unlawful exercise of the right to offset withdrawing {$1900.00} from my checking account while the investigation remains open is a clear violation of FCBA 1666, which prevents premature collection efforts during the dispute process. 

FCRA Violations : Furthermore, NFCU 's failure to investigate the fraudulent charges and their continued reporting of these charges to the credit bureaus during an open investigation is a blatant violation of FCRA 1681s-2 ( a ). The FCRA mandates that during a dispute, if the financial institution can not substantiate the charges, they must remove the disputed information from the consumer 's credit report. NFCU 's ongoing reporting of these charges to the credit bureaus without providing any evidence of my liability has irreparably harmed my credit reputation. 

The unlawful withdrawal of funds from my account, combined with NFCUs failure to provide proof of my liability for the charges, constitutes a direct violation of my rights under both the FCBA and the FCRA. Their continued reporting of the disputed charges has resulted in substantial damage to my credit score, and the wrongful imposition of interest and fees on the contested balance is unjust and illegal.

By their own admission, NFCU acknowledges that the dispute is still under investigation, and yet, they have caused significant financial and reputational harm by continuing to engage in prohibited actions.

Demand for Immediate Resolution : I respectfully request the CFPBs immediate intervention to address the following violations : Immediate reversal of the {$1900.00} withdrawn from my checking account under the unlawful exercise of the right to offset.

Removal of any and all fraudulent charges from my credit report, as per the FCRA 's requirements for ongoing disputes.

Restoration of my credit standing by ceasing to report disputed charges to credit bureaus until a lawful investigation is completed.

Immediate cessation of all fees and interest charges related to the disputed fraudulent charges.

Navy Federal Credit Union 's actions have violated my consumer rights, and I demand full restitution, the reversal of all unlawful actions, and that they be held accountable for the harm they have caused. I trust that the CFPB will take the appropriate steps to ensure compliance with federal law. 

Supporting Documentation : CFPB Complaint # XXXX Correspondence with Navy Federal Credit Union Evidence of unlawful withdrawal and offset Credit report showing ongoing fraudulent reporting

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with non-monetary relief