Before this lawsuit was filed, we had already compensated members for errors that may have occurred related to the allegations in the lawsuit,” he said. “Roughly half of the announced settlement amount is simply reissuing checks we had previously mailed that our members never cashed.”

USAA has said the size of the class numbers about 210,000 people throughout the United States and on active duty overseas.

The average settlement amount is estimated to exceed $200. Each named plaintiff stands to receive $20,000 for serving as a class representative.

The plaintiffs’ lawyers intend to ask for 27.5% of the settlement amount — or nearly $17.7 million — as their award for fees and expenses.

The settlement comes after about a year of mediation between the parties.

USAA Federal Savings Bank is an arm of USAA, the giant insurance and financial services company, which has about 14 million customers consisting of members of the military, veterans and their families. USAA has no affiliation with the U.S. military.

Bank loans

The plaintiffs had credit card accounts and loans with the USAA banks during some period of active military service after May 4, 2009. They say the obligations were subject to interest rate reduction protections under the SCRA, the Military Lending Act — or MLA — and USAA’s proprietary fee and interest reduction program.

Instead, their amended complaint said, the banks overcharged some customers during and after their active duty, “illegally” raised rates on veterans and imposed numerous wrongful finance charges and fees.

The complaint also said USAA’s “Extended Vehicle Protection” and “Debt Protection” products violated the MLA and were “useless.”

The plaintiffs had sued the USAA banks for breach of contract, negligence and violations of the SCRA, the MLA and the Truth in Lending Act, among other claims.

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The lawsuit cites an investigation by the Office of the Comptroller of the Currency — a national bank regulator — that had uncovered evidence of a combined 600 violations of the SCRA and the MLA.

In a 2019 evaluation of USAA Federal Savings Bank, the Office of the Comptroller found evidence of 546 violations of the SCRA, including failure to provide protections to military reservists as the act requires, wrongful repossession of vehicles and the filing of “inaccurate” affidavits in default judgments in civil court cases.

The Office of the Comptroller also found evidence of 54 violations of the MLA relating to the collection of past due amounts from members. The act protects service members and their families from lending practices that could pose a threat to military readiness and hurt service member retention.

In 2022, the office assessed an $85 million civil penalty against USAA Federal Savings Bank for failing to implement and maintain an effective compliance risk management program and an effective information technology risk governance program. The deficiencies resulted in violations of law, including violations of the SCRA and MLA.

The office’s consent order required USAA to provide remediation to eligible customers. The plaintiffs, though, alleged that the payments “failed to fully compensate” the class members for their damages, according to Friday’s court filing.

Settlement

The filing shows that of the $64.2 million settlement, $33.4 million will be paid to class members who received a remediation payment from USAA but “did not successfully deposit that refund.”

The net settlement amount — after fees, costs and the award to the four plaintiffs — will be used to pay $50 for each applicable account to each class member who was previously sent an SCRA or MLA remediation payment. The remainder of the net settlement amount will be distributed on a pro rata basis to class members who received an SCRA remediation payment.

If there are any settlement payments that aren’t cashed, those amounts will be distributed pro rata to the class members who “successfully received a first-round payment in excess of $250.”

The parties mediated the litigation with two retired federal judges.

The settlement is similar to those reached in two other cases — against Bank of America Corp. and JPMorgan Chase Bank — that the North Carolina court previously approved. Bank of America settled for $52 million, while Chase settled for $62 million, according to the filing.