Navy Federal Credit Union sued over insufficient reasons for credit denial

DALLAS (CN) — A Navy Federal Credit Union customer claims the bank systemically denies consumers information they are legally entitled to as to why their credit applications are denied.

Navy Federal Credit Union is a member-owned financial institution that exclusively serves members of the U.S. military community. It has over 15 million members and holds $203.5 billion in assets, making it the world’s largest credit union.

In a complaint filed in the Northern District of Texas, Dominic Castleberry claims the credit union violated the Equal Credit Opportunity Act by not giving him specific reasons for denying his application for a line of credit and simply saying it was due to “limited credit experience,” which he says left him unable to correct the issues that led to the denial.

The Equal Credit Opportunity Act, a federal civil rights law prohibiting lenders from discriminating against credit applicants based on certain protected characteristics, states that “each applicant against whom adverse action is taken shall be entitled to a statement of reasons for such action from the creditor.” Such a statement must include “the specific reasons for the adverse action taken.”

“Defendant failed to specify why the plaintiff had ’limited credit experience’ and what factors were relied upon,” Castleberry says in his complaint. “Accordingly, plaintiff was unable to address or correct the alleged deficiencies that defendant based its denial on.”

Castleberry claims Navy Federal “systematically deprives consumers of information they are entitled to under the ECOA.” He seeks to bring a lawsuit on behalf of all individuals in the U.S. who in the last five years have received adverse action letters from the credit union with “limited credit experience” stated as the basis for credit denial.

He’s represented by Timothy Hogan of Sulaiman Law Group in Lombard, Illinois.

Navy Federal did not immediately respond to a request for comment on the lawsuit.