San Antonio’s USAA to Pay $64.2 Million to Settle Overcharging Claims

Settlement Details

In a significant move, San Antonio-based financial services giant USAA has agreed to pay out $64.2 million to settle allegations of overcharging service members and veterans. The claims stem from a class-action lawsuit that charged the bank with imposing excessive fees and rates while enrolling customers into unwanted products.

Class-Action Background

The lawsuit has been ongoing for three years and involves approximately 210,000 individuals. After a year of mediation, the settlement was reached, with each affected individual set to receive a bit more than $200, while the five named plaintiffs will receive $20,000 each.

Legal Proceedings and Company Statement

The settlement is still pending approval from a federal judge. Although USAA officials continue to contest the allegations, a spokesperson noted that settling the matter was preferable to enduring “lengthy and expensive litigation.” USAA primarily serves U.S. military members and their families.

Roger Wildermuth, a USAA spokesperson, pointed out that much of the settlement amount involves reissuing checks sent to members in the past, indicating that they had already compensated customers for errors related to the lawsuit. He highlighted that around half of the settlement amount consists of funds from checks that members had previously received but failed to cash.

Distribution of Funds

In 2021, USAA mailed about 859,000 checks to compensate members for alleged overcharges. However, many of these checks went uncashed as they were sent in “nondescript envelopes,” leading recipients to mistake them for junk mail or solicitations. This oversight contributed to the accusations of USAA not doing enough to ensure that its customers received their rightful compensations.

Looking Ahead

If approved, this settlement will put an end to the legal battle and provide relief to service members and veterans who have felt shortchanged by the banking giant. As the process unfolds, many are watching closely to see how USAA will address the complaints moving forward.