Consumer complaint received 2024-06-03 00:00:00
Product: Checking or savings account — Other banking product or service
Issue: Incorrect information on your report — Account status incorrect
Company: NAVY FEDERAL CREDIT UNION
State: DC

Complaint narrative:
D

ear Navy Federal Credit Union, I am writing to formally address several concerns regarding the management of my personal and loan accounts as well as the handling of my personal information. Firstly, I grant ed Navy Federal a security interest and statutory lien in the shares and dividends on deposit in my account to secure my loan, as outlined in our contract. According to this agreement, in the event of default, Navy Federal was authorized to utilize the funds in my share and dividend accounts to cover any missed payments. Due to the impact of the COVID-19 pandemic, I lost my job and was unabl e to make timely payments for the months of XXXX, XXXX, and XX/XX/year>. Instead of utilizing the funds from my share and dividend accounts to cover these payments as stipulated in the contract, Navy Federal reported the payments as late to the credit reporting agencies, charged me late fees, and continued to pursue payment from me directly. I seek clarification on why Navy Federal failed to fulfill its contractual obligation to use the funds in my share and dividend accounts to cover my missed payments. The clause granting Navy Federal a security interest in my shares and dividends in the event of default should have been invoked to prevent these late payments from being reported and to avoid the accrual of late fees. Additionally, the language in the contract granting Navy Federal a security interest and lien is confusing. It states that Navy Federal has the right to use the collateral in my shares and dividends to settle all charges payable. However, the contract also mentions that Navy Federal can attempt to collect from me directly. This creates a contradictory situation where, on one hand, Navy Federal has agreed to use the collateral to cover any defaults, yet, on the other hand, it pursues direct collection efforts, leading to confusion and uncertainty regarding the true terms of the agreement. Furthermore, I noticed that my card agreement does not contain an opt-out clause for the sharing of my non-public personal information, as required by the Gramm-Leach-Bliley Act. This omission is concerning, as it violates my rights to privacy and proper disclosure under the law. Given these issues, I request an explanation for the following : 1. Why Navy Federal did not utilize the funds in my share and dividend accounts to cover the missed payments for XXXX, XXXX, and XX/XX/year>, as agreed upon in the contract. 
XXXX. Why my payments were reported as late and late fees were charged despite the existence of the security interest clause. 
XXXX. Why there is contradictory language in the contract regarding the use of collateral versus direct collection efforts. 
XXXX. Why there is no opt-out clause for the sharing of my non-public personal information in my card agreement, as required by the Gramm-Leach-Bliley Act. 
Additionally, I request a full accounting of the shares and dividends I have on deposit at Navy Federal. I also request that you contact the credit bureaus to update the late payments to on-time status. I urge Navy Federal to act in good faith and fair dealing and to stop the unfair and deceptive acts that have caused me undue hardship. I am also writing to seek clarification regarding the terms of my account agreement with Navy Federal. Specifically, I would like to understand the implications of the security interest clause included in the account agreement. It was my understanding when opening the account that it was an unsecured transaction. I was not aware of any collateral I was required to put up to secure opening a savings and checking account. This requirement was never clearly disclosed to me when I signed up for an account. The lack of transparency regarding the security interest and statutory lien contradicts the principles of the Fair Credit Reporting Act ( FCRA ), which mandates clear and accurate disclosure of credit terms to consumers. This omission has led to significant confusion and has unfairly impacted my financial standing. As I have only opened a deposit account and did not enter into any loan or credit arrangements with Navy Federal when I initially opened my account, I am concerned about how this clause may affect my current and future accounts. Could you please provide detailed information on the following points : XXXX. Under what circumstances would the security interest clause be activated? 
XXXX. Does the security interest clause apply to my account even if I have not taken out a loan or credit from the bank? 
XXXX. What rights does the bank have over my deposit account under this clause? 
XXXX. How would this clause impact any future loans or credit products I might obtain from Navy Federal? Moreover, if Navy Federal continues to deny me loan, credit card, and other credit services, I request a new account agreement that does not include a security agreement or statutory lien. This is necessary to ensure fair treatment and to align the terms of our agreement with the actual practices of the credit union. In my dealings with Navy Federal Credit Union, I have experienced repeated loan denials despite having pledged collateral intended to secure both current and future loans, as outlined in our initial agreement. This practice appears to be inconsistent with the terms of our agreement and may constitute a violation of consumer protection laws, including the Truth in Lending Act and the Equal Credit Opportunity Act. Specifically, Navy Federal 's refusal to extend additional credit without a clear, transparent, and non-discriminatory rationale raises significant concerns about the fairness and legality of their lending practices. I am requesting a thorough investigation into these denials and an immediate rectification of this issue to ensure compliance with all relevant consumer protection statutes. I trust that Navy Federal will address these concerns promptly and take the necessary actions to rectify any inaccuracies reported to the credit reporting agencies and refund any improperly charged late fees or other charges. 

Additionally, I expect that my rights to privacy and proper disclosure under the Gramm-Leach-Bliley Act will be respected moving forward and I will be provided with a sufficient opt-out notice. Thank you for your attention to this matter. I look forward to your timely response and resolution of these issues. 

Sincerely, XXXX XXXX please note, this request is for business purposes.

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