USAA has agreed to pay roughly $64.2 million to settle allegations that its banks overcharged service members and veterans on interest rates and fees, and gave them products they did not request, according to court paperwork filed Friday.

The settlement ends a three-year class-action lawsuit that also questions USAA’s “misleading” remediation process.

USAA issued roughly 859,000 remediation checks in 2021 to members affected by actions that landed the military-focused financial services company in hot water with the Office of the Comptroller of the Currency in 2020.

But checks arrived in “a nondescript envelope that appeared to many service members as a solicitation or ‘junk mail,’” plaintiffs alleged in an amended version of the lawsuit seen by the San Antonio Express-News.

As a result, many went uncashed.

Plaintiffs alleged USAA failed to cap interest rates at 6% on credit cards and loans for members who served on active duty after May 2009. Those products were subject to interest rate reduction protections under the Servicemembers Civil Relief Act, Military Lending Act and USAA’s own interest reduction program, the plaintiffs argued.

USAA overcharged some customers during and after active-duty periods and “illegally” raised rates on some veterans, the plaintiffs said. Additionally, the lawsuit spotlighted two USAA products — “extended vehicle protection” and “debt protection” offerings – that plaintiffs called “useless.”

USAA strongly disagrees with the lawsuit’s allegations, a spokesperson for the company said, but the settlement is in the “best interest of our membership” and avoids “lengthy and expensive litigation.” The spokesperson added that USAA charges lower interest rates than the law requires.

Notably, $33.4 million of the settlement will be paid to members who had earlier received a remediation payment but “did not successfully deposit that refund,” according to Friday’s documents, filed in the U.S. District Court for the Eastern District of North Carolina.

“Before this lawsuit was filed, we had already compensated members for errors that may have occurred related to the allegations in the lawsuit,” USAA spokesperson Roger Wildermuth told the Express-News. “Roughly half of the announced settlement amount is simply reissuing checks we had previously mailed that our members never cashed.”

Roughly 210,000 people will receive compensation through the settlement, USAA estimated, with an average payout of more than $200. The four named plaintiffs in the case are set to receive $20,000. The plaintiffs’ lawyers are seeking 27.5% of the settlement amount — or nearly $17.7 million — for fees and expenses.

The OCC fined USAA Federal Savings Bank $85 million in 2020 for failing to implement and maintain effective compliance risk management and IT risk governance programs. An evaluation of the bank a year earlier found 546 violations of the SCRA, including failure to provide protections to military reservists, wrongful repossessions of vehicles and the filing of inaccurate affidavits in default judgment cases.

The same OCC report also found evidence of 54 MLA violations over USAA’s use of remotely created checks to collect past-due amounts from members who were covered borrowers.

The 2020 consent order required USAA to provide remediation to eligible customers. But the plaintiffs in the case settled Friday alleged that the payments “failed to fully compensate” class members for damages. Plaintiffs sued USAA Federal Savings Bank and USAA Savings Bank for breach of contract, negligence and violations of the SCRA, MLA and the Truth in Lending Act.

The judge in Friday’s case, Terrence Boyle, approved settlements in SCRA cases against Bank of America in 2018 and JPMorgan Chase in 2020 — for $41.9 million and $62.5 million, respectively.