New USAA investigation reveals ‘fundamental breakdown’ with repeated compliance problems as profits disappear

Although USAA has been a respected financial institution for decades, serving military members, veterans and their families, it has recently experienced difficulties with regulators and customers.

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A new joint investigation by American Banker and the San Antonio Current details the organization’s many problems and how the bank and insurer are currently “navigating a minefield of their own making.”

For example, he was punished for charging the military higher interest than federal law allows. For this and other violations, regulators have twice failed a review of the Community Reinvestment Act that measures how well banks serve communities.

It’s a test most banks pass easily and these failures, in 2020 and 2023, indicate “a fundamental breakdown” at USAA, said Adam Rust, director of financial services at the Consumer Federation of America , in the article. “What is particularly shameful is that they serve soldiers who deserve better,” he added.

Even more alarming, this year, customers reported losing thousands of dollars of their hard-earned money due to mysterious deposits and withdrawals, according to a report from News 4 San Antonio. Some say they were even asked to cover negative balances in their accounts after their money was stolen.

Here’s what you need to know about what’s happening at USAA and what you can do if you’re having trouble with your bank.

Significant problems abound at USAA

Overall, it appears that USAA has not invested enough in protective measures as it has managed to stay in good graces with its longtime customers and regulators. It has also struggled to turn a profit in recent years, reporting a pre-tax loss of $398 million in 2023.

Three former compliance employees who spoke on condition of anonymity to American Banker and the San Antonio Current complained that the department struggled under pressure, with a lack of cohesion, little openness to reporting more efficient processes and initiatives that were “falling through the cracks or I’m just stuck on the road.” »

In 2023, customers filed 417 complaints with the Consumer Financial Protection Bureau about the bank’s checking and savings accounts, a dramatic increase from 150 in 2018.

Since 2019, USAA has also been fined a number of times: $3.5 million for customer-related violations, $85 million for compliance and management issues, and $140 million for weak protections against money laundering.

USAA also paid $64 million to settle a class action lawsuit related to overloading service members who were entitled to certain protections.

Then there are the many changes happening above. It’s not just USAA CEO Wayne Peacock who is leaving (he plans to retire in 2025). Last year, several executives parted ways with the company, including bank chairman Paul Vincent, audit director Gilbert Gitichie, risk management chief Neeraj Singh and security chief Jason Witty .

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Experts say there could be a major breakdown at USAA.

“Independently, these various violations could be understood, but collectively they show a pattern that raises concern,” Mark Williams, a finance professor at Boston University and former banking supervisor at the Federal Reserve, told American Banker and at the San Antonio Current. “There is something more fundamental.”

Customers interviewed for the article said they felt the quality of customer service they received had declined and that they wish there was more transparency about security issues.

Dealing with issues with your bank

If you’re having problems with your bank and don’t feel like you’re making any progress by talking to customer representatives, there are other alternatives. When attempting to resolve issues, be sure to document every interaction you have.

You can use social media to draw attention to your issue and air your grievances or you can send a direct message to the company’s social media profile to raise your concerns.

Talking to someone in the CEO’s office can show how serious you are and the need to have your concerns heard. Find the bank’s main phone number and ask to speak to someone who works in the CEO’s office. State your situation and politely explain your frustrations, because your goal is to be heard and hopefully the person on the other end of the line will be willing to help.

If you feel you have been discriminated against or the bank has been harmful or misleading in any way, consider filing a complaint with regulators. The Federal Reserve has a consumer complaint form that you can fill out online or call their consumer help line. This is where all your documentation about your problem comes in handy.

You can also submit a complaint about financial products and services to the Consumer Financial Protection Bureau and be sure to provide as much detail as possible. The agency will forward the complaint to the company to help you get a response, or will forward it to another agency it believes is better suited to help you.

You can also submit a complaint to the Better Business Bureau if you are unhappy with poor customer service. Keep in mind that banks may not offer a response.

As a consumer, you have more influence than you think. If you are unhappy with your bank, you should seriously consider changing.

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This article provides information only and should not be considered advice. It is provided without warranty of any kind.