USAA Savings Bank Rates and Fees for Service Members SCRA Class Action

The Servicemembers Civil Relief Act (SCRA) is meant to help make up for some of the financial sacrifices that members of the US armed services make when they go to serve their country. The SCRA’s benefits include a cap on interest rates for service members of 6%. USAA Federal Savings Bank and USAA Savings Bank offer a Military Benefits Program the purportedly offers more generous benefits than even those the SCRA requires. But the complaint for this class action alleges that these banks in fact offer interest rates and fees that are higher than what they’re permitted to charge.

The class for this action is all persons who, at any time on or after September 11, 2001, received reduced interest and/or fee benefits from USAA Federal Savings Bank or USAA Savings Bank on an interest-bearing obligation because of the obligor’s military service. The class does not include those who have given USAA a release of the rights in this action.

All persons who, at any time on or after September 11, 2001, received reduced interest and/or fee benefits from Defendants on an interest-bearing obligation because of an obligor’s military service, but excluding persons who have executed a release of the rights claimed in this action.

The SCRA requires that when service members are put on active duty, the interest rates on any debts they have incurred before that are reduced to 6%, from the day they receive their deployment orders throughout the time they are on active duty. Banks and other financial institutions must forgive any interest over 6% on existing loans.

USAA prides itself on being a bank for service members, veterans, and the families of service members and veterans. It offers banking products and services throughout the US, including credit cards, loans, mortgages, real estate brokerage, trust services, checking and savings accounts, and time deposits.

The complaint alleges that the USAA banks “breached their statutory and contractual duties to America’s fighting forces by charging interest rates and fees that were too high, allowing unlawful charges to improperly inflate servicemembers’ principal balances; and charging compound interest on these inflated balances.”

Some of the service members were not aware they were being charged improper interest and fees, the complaint says, “until 2021, when [USAA] sent misleading correspondence and payment checks to some military families.” The complaint claims that investigations of those payments revealed “wholesale violations of the SCRA and other military benefits” by USAA.

The complaint alleges that some of the violations are still ongoing, for example, those involving the inflation of principal balances by improper fees. It alleges violations of other laws as well in the correspondence sent to service members “that were designed to conceal [USAA’s] violations of the SCRA and discourage further investigation…”

Article Type: Lawsuit
Topic: Military
Tags: Excessive Interest Rate, Military Service Members and/or Veterans, SCRA, Your Bank