OCEANSIDE, Calif.–A credit union that attracted national and congressional scrutiny along with widespread media coverage over its NSF fees and income from members of the military, many of them young recruits, has signed a new contract that gives those recruits additional options.
The $1.46-billion Frontwave Credit Union, which primarily serves recruits at the Marine Corps Recruit Depot, drew widespread attention in 2024 after data compiled by the state of California showed that in 2022 it had collected approximately $8 million in overdraft penalties, or nearly 12% of its overall revenue. That figure was about triple the average among all state-chartered credit unions, according to a review that was conducted as part of KPBS investigation.
9% of Income
Frontwave Credit Union collected $8.1 million in overdraft fees in 2024, which represented nearly 9% of its overall income, according to data collected by the state, the report added.
A follow-up KPBS investigation in 2024 revealed the Marine Corps has had an exclusive arrangement with Frontwave Credit Union going back decades. As the CU Daily reported here, Sen. Elizabeth Warren (D-MA) and others challenged the renewal of the contract.
‘Instructed to Sign Up’
“The agreement funneled thousands of Marine recruits into the credit union every year in order to process their direct deposits during boot camp,” KPBS reported. “Marines and former Frontwave employees told KPBS that recruits were instructed to sign up for the accounts, which boosted the credit union’s membership numbers over time. KPBS’ investigation also revealed the credit union has relied on overdraft fees from Marines, their families and other customers as a key source of revenue.”
KPBS said it has now learned the latest contract between the Marine Corps and Frontwave keeps the credit union as the on-base financial institution for the Marine Corps Recruit Depot near downtown San Diego, but now also explicitly states recruits can use the bank or credit union of their choice to receive their paychecks.
‘Special Attention’
The agreement also expands Frontwave’s obligations to provide financial education to Marines, the KPBS report added, noting Frontwave is supposed to give special attention to junior enlisted, civilian grade and newly married personnel.
The news outlet said both the credit union and the Marine Corp declined to comment on the matter.
