Consumer complaint received 2025-12-08 00:00:00
Product: Checking or savings account — Savings account
Issue: Managing an account — Deposits and withdrawals
Company: NAVY FEDERAL CREDIT UNION
State: NC

Complaint narrative:
Navy Federal Credit Union froze my personal savings account ending XXXX on XX/XX/year>, without notice, without a lawful basis, and without complying with XXXX XXXX or its own member communication standards. 
For over XXXX months, Navy Federal withheld my funds, refused to provide required disclosures, and denied me access to my own money. 
On or around XX/XX/year>, XXXX XXXX initiated unauthorized internal cashiers check management activity on my frozen account without my consent, without notice, and despite the account being frozen. 
I also called Navy Federal multiple times and representatives repeatedly told me to contact the originator of the funds, which was false, misleading, and legally improper. 

Navy Federal Repeatedly Told Me to Contact the Originator, Which Is Legally Improper Multiple Navy Federal representatives stated that I must contact the originator of the funds to resolve the freeze. 
This was : factually false, legally incorrect, and a deceptive misrepresentation of how banking law works. 
There is no third-party originator involved in my situation. Navy Federal already : accepted the deposit, credited it to my account, placed a freeze, and took full control and custody of the funds.

Once a deposit is accepted, Navy Federal alone is responsible for holds, freezes, or reversals. 
A. Privacy Law Violations ( XXXX & XXXX ) Directing me to an outside originator violates : GLBA prohibits implying that outside parties control or have information about my private account RFPA prohibits directing members to external parties for internal account matters XXXX XXXX Violation This instruction misled me about : who had authority, who was responsible, and how to resolve the issue. 
This is a deceptive practice under 12 U.S.C. 5531 & 5536.

Privacy Law Violations Navy Federal violated federal privacy requirements by : implying that external parties had authority over my account, failing to keep member account information confidential, misdirecting me to unrelated third parties, failing to adhere to GLBA-required transparency and accuracy, refusing to communicate via the email address I designated. 
This is inconsistent with GLBA, RFPA, and Navy Federals own published privacy commitments. 

Violations of Federal Banking Regulations A. REG CC Violations ( 12 CFR 229.10229.13 ) Navy Federal failed to provide : written reasons for the hold, legal basis for the freeze, any timeframe for release, any Reg CC-compliant disclosures, and instead performed unauthorized account actions.

B. UDAAP Violations ( Unfair, Deceptive, Abusive Conduct ) Navy Federal engaged in : Unfair practices withholding access to essential funds without cause Deceptive practices misrepresenting that the issue involved a third-party originator Abusive practices exploiting its position to obscure internal decisions XXXX Unauthorized Account Activity The unauthorized cashiers check activity is a severe regulatory violation. 

Retaliation After My XXXX Release Demand On XX/XX/year>, I issued written notice giving Navy Federal XXXX XXXX to release the funds and correct the unlawful freeze. 
Immediately afterward, Navy Federal : escalated internal account actions, initiated unauthorized cashiers check procedures, generated contradictory internal messages, increased internal activity on the account. 
The timing strongly indicates retaliation for asserting my legal rights, which is prohibited under UDAAP and NCUA fair-dealing expectations.

Theft by Conversion and Unauthorized Use of Funds Navy Federals conduct satisfies the elements of theft by conversion : A. Unauthorized XXXX and XXXX XXXX funds were frozen without lawful authority. 
B. Unauthorized Internal Use ( Float Benefit ) Interest continued to accrue while I was denied access, meaning Navy Federal used my funds internally.

C. Unauthorized Change in Form Navy Federal initiated cashiers check activity without my consent converting my deposit into a different instrument.

D. Deprivation I have been denied access to my own funds for months.

This constitutes misappropriation and conversion under both federal consumer protection standards and state law.

Unauthorized Cashiers Check Management Activity Navy Federal initiated cashiers check procedures despite : no authorization from me, no request from me, no notice to me, and the account being frozen. 
This is not an internal coding error. 
It is affirmative action on a members funds without consent. 
This violates : XXXX XXXX XXXX standard banking practice member rights fiduciary duties under credit union governance law Failure to Provide XXXX Bond XXXX Information ( 12 CFR 713.1 ) On XX/XX/year>, I lawfully requested Navy Federals fidelity bond / crime coverage carrier, as permitted under 12 CFR 713.1. 
Navy Federal did not : provide the bond carrier, acknowledge the request, or comply with bonding transparency obligations.

Instead, Navy Federal escalated adverse actions on my account.

This failure raises concerns regarding : lack of proper bonding, concealment of improper conduct, and systemic governance failures. 

Attempt to Circumvent My XXXX Deadline Navy Federals internal rush to create cashiers check activity and alter account status before my deadline expired suggests : avoidance of accountability, manipulation of internal records, an attempt to preempt a future complaint or dispute, and intentional circumvention of a lawful member notice. 
This requires regulatory investigation. 

Governance Violations 12 U.S.C. 1761b Under 12 U.S.C. 1761b, the Board of Directors of every Federal Credit Union including Navy Federal shall have the general direction and control of the affairs of the Federal credit union. 
This means : account freezes, reversals, cashiers check creation, and deprivation of member access are XXXX affairs, requiring : board-approved policy, delegated authority, proper notice, and recorded oversight. 
Navy Federal has produced no evidence that : the XXXX authorized these actions, any policy permitted these actions, employees acted within lawful delegation, the XXXX was notified of member-impacting decisions. 
Therefore, these actions appear ultra vires taken outside legal authority and constitute a fiduciary breach at the institutional level. 
This is extremely serious under NCUA governance law.

Summary of All Violations Navy Federals actions include : Reg CC violations UDAAP violations GLBA violations RFPA violations Theft by conversion Unauthorized cashiers check activity Retaliation Governance violations under 1761b Failure to provide fidelity bond information Misrepresentation to the member Deprivation of funds for months This is not an isolated account issue. 
It reflects systemic misconduct, failure of governance, and disregard for federal regulations. 

Refutation of Anticipated Defenses by Navy Federal Credit Union This addendum is submitted to proactively address and refute the most common defenses federally chartered credit unions assert in response to CFPB complaints. Based on my documented timeline and Navy Federal Credit Unions conduct, none of these anticipated defenses are valid, applicable, or supported by law.

1. Anticipated Defense : Account was frozen for security or fraud review.

Rebuttal : 1. No Reg CC notice was provided at any time, which is mandatory for ANY freeze or hold.

2. A security review can not lawfully last four months ; CFPB and NCUA guidance require timely resolution.

3. Navy Federal initiated unauthorized cashiers check activity during the freeze, which contradicts any claim of a protective or fraud-based freeze.

4. Multiple representatives told me to contact the originator, which is not part of any fraud-prevention protocol.

A security freeze defense is inconsistent with the facts, timing, and sequence of events.

2. Anticipated Defense : Cashiers check activity was a system error.

Rebuttal : 1. Cashiers check management can not initiate itself ; it requires manual employee action or authorization.

2. The activity occurred immediately after I issued a formal XXXX notice demanding release of my funds. 
3. If it were an error, Navy Federal would have immediately reversed, corrected, or disclosed it none of which occurred.

4. System errors do not selectively affect a single frozen account, nor do they appear at moments of member escalation.

A system glitch explanation is factually impossible and contradicted by internal behavior patterns.

3. Anticipated Defense : We properly advised the member to contact the originator.

Rebuttal : 1. There is no third-party originator involved ; Navy Federal already : o accepted the deposit, o credited it to the account, o froze the funds, and o assumed full custody.

2. Under Reg CC, GLBA, RFPA, and standard banking practice, once funds are credited, the financial institution is solely responsible.

3. Directing me to contact the originator is : o legally incorrect, o misleading, o a violation of GLBA privacy principles, and o a deceptive act under UDAAP.

This misrepresentation can not be justified under any lawful disclosure or internal policy.

1. 4. Anticipated Defense : Funds remained under review for returnability.

This defense contradicts both law and internal transaction behavior.

Rebuttal : 1. No deposit can remain in review from XX/XX/XXXX through XX/XX/XXXX under any federal regulation.

2. Reg CC requires strict hold timelines, none of which were followed.

3. If Navy Federal believed the funds were returnable, it could not simultaneously initiate cashiers check activity.

4. Navy Federal accepted and credited the deposit which means it was collected.

This defense contradicts both law and internal transaction behavior.

5. Anticipated Defense : We are not required to provide XXXX bond XXXX information. 
Rebuttal : 1. Under 12 CFR 713.1, every federal credit union must maintain and disclose fidelity bond and crime coverage for claim-related inquiries.

2. This requirement applies specifically when member harm, misuse of funds, or potential conversion is alleged.

3. Navy Federals refusal to disclose bond information is a compliance failure and signals a governance issue.

This defense can not withstand regulatory scrutiny.

6. Anticipated Defense : No conversion occurred because no loss occurred. 
Rebuttal : XXXX includes : unauthorized dominion, unauthorized use, unauthorized change in form, and deprivation, not just financial loss. 
Navy Federals conduct satisfies all elements : 1. Freeze without authority = unauthorized control 2. Accrued interest while denying access = unauthorized internal use 3. Initiating cashiers check activity = unauthorized conversion 4. Four-month deprivation = completed tort of conversion Loss is not required for liability.

7. Anticipated Defense : We acted under Board-approved policy or delegated authority.

Rebuttal : Under 12 U.S.C. 1761b, the Board of Directors must : control all credit union affairs, approve all policies related to account freezes or reversals, authorize delegations of authority, and provide documented oversight.

Navy Federal has not produced and can not produce any board-approved policy permitting : freezing member funds for months without notice, initiating cashiers check activity during a freeze, misdirecting members to external parties, refusing fidelity bond disclosure, or retaliating after member notices.

This renders the actions ultra vires outside legal authority.

8. Anticipated Defense : No retaliation occurred.

Rebuttal : 1. Navy Federal escalated internal actions within hours of receiving my written XXXX notice. 
2. Retaliation is defined under XXXX as adverse action following a consumers assertion of rights. 
3. The temporal proximity is legally sufficient evidence and CFPB routinely treats such timing as indicative of retaliation. 
They can not neutralize the timing evidence. 
9. Anticipated Defense : This was an internal operational issue, not a legal violation. 
Rebuttal : This conduct violates : XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX. XXXX state conversion law standard banking practice contractual member rights This is not operational it is systemic, regulatory, and fiduciary. 
CONCLUSION This pre-rebuttal demonstrates that XXXX XXXX can not credibly assert : fraud freeze system error member misunderstanding procedural justification board policy XXXX review non-retaliatory intent XXXX defense fails under : the timeline, the documented facts, the unauthorized cashiers check activity, the refusal to disclose the fidelity bond, and the governing federal statutes. 
Therefore, the CFPB should treat this matter as a :

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