WASHINGTON–Sen. Elizabeth Warren (D-MA) is calling on the Defense Department to hold off on renewing a contract it has with Frontwave Credit Union until its overdraft fees and “other abusive practices” can be reviewed.
The $1.4-billion, Oceanside, Calif.-based Frontwave CU, which primarily serves Marines at the Marine Corps Recruit Depot, many of them young, was the subject of significant scrutiny and media reporting 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 conducted as part of KPBS investigation.
KPBS, which extensively reported on the data that had been released by the state and particularly on Frontwave Credit Union, said it found Frontwave’s financial records show it “easily could have lost money” in recent years without income from overdraft fees.
The KPBS reporting led to a congressional investigation.
‘New Information Cited’
In a letter to Defense Secretary Pete Hegseth, which cites the KPBS reporting, Warren requested the U.S. Department of Defense (DOD) delay renewing Frontwave’s contract with the Marine Corps until the DoD can ensure servicemembers “have adequate protections in place to prevent excessive overdraft fees and other abusive practices.”
“New information and documents I obtained as part of my investigation of Frontwave Credit Union reveal the Department of Defense does not adequately protect service members from exorbitant overdraft fees in its contracting process,” the letter reads. “I ask that the DoD act quickly to modify and improve its agreements with Frontwave and other credit unions and banks to ensure that financial institutions do not take advantage of service members, their families, and others serving on military bases. This is a particularly urgent matter, as I have learned that Frontwave’s agreement with DoD may soon be renewed.”
The contract went up for review in March.
America’s CU Responds
In response, America’s Credit Unions President and CEO Jim Nussle said in a statement, “The credit union industry is committed to ensuring our servicemembers have a trusted place to turn during financial hardships and a partner to thrive during service and beyond. Defense credit unions are invested in the financial wellbeing of their members, and their collective services offered to educate members and help them achieve financial milestones are a huge benefit to the strength of our country. Credit unions have long worked with the DoD to provide services on military bases. The industry trusts that the DoD also works in the best interest of the military as it selects partners to support financial readiness.”
The full Warren letter can be found here.
