USAA, the financial institution serving military service members and their families, has agreed to stop seizing coronavirus relief checks to settle negative account balances after the move sparked backlash.
The bank initially defended the decision as permissible under federal banking regulations, but it announced its decision to reverse the policy on Thursday, Military Times reported. USAA touts 13 million customers, who are primarily current and former military members as well as their families, and the initial decision posed a risk of depriving veterans and active-duty troops of their coronavirus relief payments.
The bank announced it would retroactively apply the payments back to its customers who had their relief checks reduced as a result of negative account balances.
“Beginning as early as today, we will apply this policy retroactively to any member accounts with a negative balance at the time the first stimulus checks were deposited, so that members will have access to their stimulus funds,” USAA spokesperson Matthew Hartwig said in a statement provided to Military Times. “This will allow members access to their full stimulus payment to help cover the costs of rent, food and other important necessities.”
Hartwig said USAA would begin returning payments that day.
“For active member deposit accounts, we have paused the recovery of any negative account balance existing at the time their stimulus payment was deposited for a period of 90 days, allowing members access to their full stimulus payment for this time period. This policy is being applied retroactively to any member accounts with a negative balance at the time their stimulus checks were deposited,” USAA explained on its website.
The American Prospect had reported USAA’s original policy on Thursday. Hartwig said in a statement provided to The American Prospect that paychecks sent to USAA accounts could be reduced as a result of legal garnishment or lien requirements on in cases where the checks are sent to accounts with existing negative balances.
Many relief checks have been issued through direct deposit into Americans’ bank accounts used account information connected to their 2018 tax returns. Several watchdog groups have reportedly raised concerns that this method of issuing relief checks could place the payments at the mercy of the financial institutions that receive them.
Stimulus payments can be as high as $1,200 for individuals and $2,400 for married couples, with an additional $500 per dependent.
Since announcing the reversal, the Veterans Education Success organization has lauded USAA’s decision.
Along with announcing the reversal, Hartwig noted other USAA programs aimed at providing financial relief to customers during the ongoing coronavirus pandemic. One program provides for a 20 percent credit for two months of car insurance premiums due to a reduction in travel during the coronavirus crisis.
(Image courtesy of 401kcalculator.org)