VIENNA, Va. — A Virginia state senator is pressing Navy Federal Credit Union to provide relief to members who say criminals took out personal loans through their accounts without their authorization, leaving some victims responsible for repaying the loans at interest rates as high as 18%, according to WTKR.
Republican state Sen. Bill DeSteph, who represents Virginia’s 20th District, told the television station he has spoken multiple times with Navy Federal leadership about the issue and could pursue legislation if the credit union does not address it.
“There’s a crack in the system somewhere that needs to be fixed,” DeSteph told WTKR.
Hundreds Targeted in ‘Parking Lot Scam’
The dispute stems in part from a fraud scheme federal prosecutors have called the “parking lot scam,” which WTKR has investigated for several years in Virginia’s Hampton Roads region.
In one version of the scheme, criminals approach Navy Federal members pretending to need help and ask to use their phones. Once given access to the devices, the scammers allegedly use victims’ accounts to obtain personal loans and transfer the proceeds elsewhere.
One federal criminal case identified more than 500 victims, according to WTKR. Nearly all 10 defendants charged in that case have been sentenced.
Several victims told WTKR that Navy Federal has required them to repay loans obtained through the scheme even after they reported the transactions as fraudulent. Some of the loans carry interest rates of 18%.
DeSteph said he has raised the issue with Navy Federal as well as the Virginia State Corporation Commission’s Bureau of Financial Institutions, Virginia Credit Union League, Virginia Bankers Association and National Credit Union Administration.
“Everyone I’ve talked to knew it was a problem,” DeSteph said.
Attorney Represents About 50 Victims
Attorney Gary C. Byler, who became involved after seeing WTKR’s earlier reporting, now represents about 50 people who say they were victims of the scheme.
Byler told WTKR he has filed four individual lawsuits and sent demand letters on behalf of other clients. Some cases have resulted in settlement offers or payments, while others have been rejected or received no response, he said.
“The bottom line is they didn’t ask for the money, they didn’t get a penny and they’ve reported it to Navy Federal Credit Union,” Byler said.
He said additional lawsuits could be filed.
Navy Federal: Claims Reviewed Individually
Navy Federal told WTKR it could not discuss individual cases because of privacy concerns and pending litigation.
“Navy Federal takes fraud and scam-related activity very seriously and complies with all applicable laws and regulatory requirements when investigating and resolving such claims,” the credit union said. “Each claim is evaluated based on its unique facts and circumstances.”
Navy Federal said it also cooperates with law enforcement when appropriate.
The credit union separately urged members to protect access to their phones and other digital devices as they would cash or other valuables and warned members not to open banking applications before handing their phones to strangers.
DeSteph said he believes additional safeguards may be needed when personal loans are issued and would prefer Navy Federal address the problem voluntarily rather than through legislation.
“These are the members of Navy Federal,” DeSteph told WTKR. “I would hope
