‘A minefield of its own making’: New investigation of USAA reveals ‘fundamental breakdown’ with repeat compliance issues as profits vanish

For instance, it’s been punished for charging military members more interest than federal law allows. For this and other violations, regulators failed it twice in a row in the Community Reinvestment Act exam that measures how well banks serve communities.

This is an exam most banks pass easily and these failures, in 2020 and 2023, point to "a fundamental breakdown" at USAA, said Adam Rust, the director of financial services at the Consumer Federation of America, in the article. "What's especially shameful about it is that they're serving service members who deserve better," he added.

Even more alarmingly, 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 on their accounts after their money was stolen.

Here’s what you should know about what’s happening at USAA and what you can do if you have issues with your bank.

Significant Issues Abound at USAA

Overall, it appears USAA did not make sufficient investments in safeguards as it grew to keep in good graces with their longstanding customers and with regulators. The bank subsidiary has also been struggling to turn a profit in recent years, reporting a pretax loss of $398 million in 2023. S&P Global Ratings in May said it does not expect the bank to return to profitability until 2025.

Three former compliance employees who spoke on condition of anonymity to American Banker and the San Antonio Current complained about the department struggling under pressure, with a lack of cohesiveness, little openness to making processes more efficient and initiatives that "were either falling through the cracks or just getting roadblocked."

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

Starting in 2019, USAA has also faced a number of fines — $3.5 million over customer-related violations, $85 million over compliance and management issues and $140 million over weak protections against money laundering.

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

Then there’s the many changes higher up. It’s not only USAA CEO Wayne Peacock who is leaving (he’s planning on retiring in 2025). The past year has seen several leaders part ways with the company, including Bank President Paul Vincent, Chief Audit Executive Gilbert Gitichie, Chief Risk Officer Neeraj Singh, and Chief Security Officer Jason Witty.

Experts say that there may be a significant breakdown at USAA.

"Independently, these various violations could be understood, but collectively, they show a pattern that raises concerns," said Mark Williams, a Boston University finance professor and a former bank supervisor at the Federal Reserve, to American Banker and the San Antonio Current. "There's something more fundamental."

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

Handling Issues With Your Bank

If you’re facing issues with your bank and don’t feel like you’re getting anywhere when speaking with customer representatives, there are other alternatives. When making attempts to solve any issues, make sure to document any interactions you have.