Questions lurk over Navy Federal and CFPB

The CFPB consent order that cited the $77 billion Navy Federal Credit Union Tuesday with deceptive debt collection practices is raising questions about the world’s largest cooperative and the CFPB’s enforcement actions.

The Vienna, Va.-based credit union was ordered to pay affected members $23 million and a $5.5 million civil penalty.

“I think that questions need to be asked about [Navy Federal’s] incentive structure,” Keith Leggett, retired SVP and senior economist for the American Bankers Association, said. “What was the incentive structure? Were employees’ compensation tied to debt collection? And then you have to ask did this cause employees to overstep and engage in unethical behaviors and was there some direction by managers in the collection department?”

He also questioned how long these debt collections practices were going on because the CFPB investigation looked at the credit union’s internal operations from January 2013 to July 2015.

In addition, what is also unknown is how and why these debt collection practices were initiated, and when Navy Federal’s top executive team became aware of them.

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