May 07, 2025

Warren Calls on Hegseth to Protect Marine Recruits, Freeze Contract Renewal with Credit Union Under Investigation for Exploitative Overdraft Fees

Frontwave Credit Union’s contract with the Marine Corps is expected to be renewed imminently

“[DoD] does not adequately protect service members from exorbitant overdraft fees in its contracting process…In the interim, I ask that DoD refrain from renewing its contract with Frontwave”

Text of Letter (PDF) | Frontwave Response to Follow-up Questions (PDF)

Washington, D.C. — U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Armed Services Subcommittee on Personnel, wrote to Secretary of the Department of Defense (DoD) Pete Hegseth urging him to freeze the Marine Corps contract renewal with Frontwave Credit Union until the contract terms are revised to protect Marines from abusive overdraft fees. Last year, Senator Warren launched a bipartisan investigation with nine members of Congress into the California-based credit union for its history of targeting Marine recruits with excessive overdraft fees. 

For 25 years, Frontwave Credit Union has had an exclusive agreement with the Marine Corps that funnels recruits from the Marine Corps Recruit Depot (MCRD) in San Diego and automatically enrolls them in Frontwave checking accounts to receive their paychecks by direct deposit. Approximately 99% of MCRD recruits were automatically enrolled with Frontwave.

In March 2024, a KPBS investigation exposed Frontwave’s predatory practices, finding that every time a Marine’s account is overdrawn by more than $20, they are charged a $20 per-purchase fee – with fees that can run as much as $500 in total. Base pay for newly enlisted Marines is around $1,800 – $2,000 per month before taxes. A $500 debt to Frontwave, compounded with interest, could take years for a recruit to repay and be disastrous for their credit score.

In 2022 alone, Frontwave made $7.8 million from overdraft and non-sufficient funds (NSF) fees. Frontwave’s entire profit came from overdraft fees, and was triple the average for state-chartered credit unions. Without the revenue from overdraft fees, Frontwave would have faced significant losses for years.

Senator Warren’s investigation found that the average overdraft fees for the bank’s customers that were subject to these fees easily exceed $200 annually. Frontwave confirmed to Senator Warren that its contract with the Marines did not contain any terms related to overdraft fees. 

“New information and documents I obtained as part of my investigation of Frontwave reveal that the Department of Defense does not adequately protect service members from exorbitant overdraft fees in its contracting process,” said Senator Warren. 

“The findings [of my investigation] indicate a need for DoD to review its contract with Frontwave Credit Union…and ensure that they have adequate protections in place to prevent excessive overdraft fees and other abusive practices,” Senator Warren concluded. 

Senator Warren urged Hegseth to begin the review process as soon as possible and provide her staff with a briefing on DoD’s efforts to protect Marines from predatory overdraft fees within 30 days. 

###