Can an insurance company conspire with its banking affiliate to remove money from a customer’s bank account? That was the question presented to SDCAN by a consumer who was subject to that illegal tactic. In a dispute over an auto accident settlement, USAA Insurance removed money from a consumer’s USAA Bank checking account without her authorization. Can USAA do this? The answer is no. But, more worrisome, is that USAA won’t admit that it violated the law. How wise is it to have both your insurance and banking services provided by the same company? As you read what we’ve documented, you may want to reconsider combining your insurance and financial services with one company.
USAA Insurance has been serving customers (largely military personnel and their families) since the 1920s and has grown to serve over ten million customers. It has expanded its operations beyond its highly-rated insurance services into banking and other financial services. It is largely viewed within the industry as being a reasonably-priced and customer-friendly company…..unless you have a dispute with them. That’s where things get ugly.
In the past, we’ve documented some of the tactics used by USAA in total loss insurance claims. However, even we were surprised when a totally avoidable dispute over a auto claim settlement resulted in USAA seizing money from a customer’s bank account. This customer was involved in an automobile accident on March 10, 2015. She subsequently settled with USAA Insurance and authorized the deposit of the settlement amount ($21,428.53) into her USAA checking account. This payment was deposited into her USAA checking account by USAA Casualty on May 6th. Two weeks after the amount had been deposited and the funds reallocated, she received notice from USAA that the settlement payment made by USAA Insurance “has been canceled” and that USAA taken $21,428.53 from her USAA checking account. Had USAA called the customer, it would have realized that it had outdated information and would have corrected its files. However, the company never bothered contacting the customer. Instead, it unilaterally repealed the settlement and took money directly out of the customer’s bank account.
We looked into the matter and found that USAA had blatantly violated California and Federal law. A bank simply cannot permit another company to access its customer’s checking account to withdraw funds without the customers’ authorization or consent, since doing so is an unequivocal act of conversion if not downright theft. Yet this is exactly what USAA insurance did….. aided and abetted by its affiliate USAA Bank.
In July 2015, we asked USAA whether this was a common practice. It has not yet responded. We asked USAA whether any other customers have been subjected to this practice. It has not yet responded. We asked USAA to agree never to do this to any other customer. It has not yet responded. If USAA has ever done this to you, please let us know. Because large companies create transactional systems, there is a high likelihood that this was not an atypical or nonstandard event. As we learn more, we’ll share it with you. In the meantime, you may want to rethink the wisdom of combining your banking and insurance services with one company.