OCEANSIDE — The Marine Corps has renewed its contract with Oceanside-based Frontwave Credit Union despite Sen. Elizabeth Warren’s (D-Massachusetts) plea to reconsider earlier this month over the financial institution’s “deeply exploitative overdraft practices.”
In a May 6 letter to Secretary of Defense Pete Hegseth, Warren cited findings that Frontwave, which serves service members at the Marine Corps Recruit Depot in San Diego, automatically enrolled recruits in checking accounts without adequately disclosing overdraft policies.
As a result, some Marines incurred high fees and, in some cases, became trapped in what Warren described as “a cycle of negative checking account balances.”
Warren’s investigation revealed that Frontwave customers paid an average of more than $200 annually in overdraft and non-sufficient fund fees. According to documents obtained by Warren, the credit union’s agreement with the Department of Defense does not include terms governing such fees.
The third-term U.S. senator called on the Pentagon to immediately review all agreements with financial institutions operating on military bases and to ensure they include safeguards against abusive banking practices. In the meantime, Warren asked the department not to renew its contract with Frontwave until those concerns were addressed.
“…The Department of Defense does not adequately protect service members from exorbitant overdraft fees in its contracting process,” Warren wrote in her May 6 letter. “I ask that the DoD act quickly to modify and improve its agreements with Frontwave and other credit unions and banks to ensure that financial institutions do not take advantage of servicemembers, their families, and others serving on military bases.”
Last year, a KPBS investigation revealed that Frontwave has benefited from an exclusive agreement with the Marine Corps for at least 25 years. Each year, approximately 20,000 recruits train at the Marine Corps Recruit Depot in San Diego. The news outlet reported that the Marine Corps then sends many of those service members to Frontwave to process their paychecks.
The KPBS investigation also found that the credit union collects millions in overdraft charges from young recruits yearly, relying on the funds as a significant revenue source.
In 2024, Frontwave collected nearly $8.1 million from nonsufficient funds and overdraft fees, approximately 8.66% of the credit union’s total income, according to an annual report by the California Department of Financial Protection and Innovation.
The report showed that when a member’s account was overdrawn by more than $20, that member was charged an additional $20 fee every time they made a purchase. The base pay for Marine recruits, some as young as 17 years old, is between $1,800 and $2,200 per month.
Frontwave CEO Bill Birnie previously told KPBS that overdraft fees are “an important source of income” for the company, but the act was not predatory in nature.
After the KPBS investigation, Warren launched her own probe into the matter, prompting other lawmakers to voice concerns. In an April 2024 letter to Birnie, Warren and a bipartisan group of lawmakers — including Vice President JD Vance (then R-Ohio), Richard Blumenthal (D-Connecticut), Cory Booker (D-New Jersey), Bernie Sanders (I-Vermont) and Rep. Sara Jacobs (D-California) — demanded answers to questions over “reports that your credit union has exploited young service members by charging them millions of dollars in predatory and exorbitant overdraft fees.”
“Frontwave owes service members and the American public an explanation for its deeply exploitative overdraft practices that harm service members and their families,” the letter reads.
Over a year later, Warren called for a postponement when the Frontwave contract was up for renewal. However, the senator’s request was seemingly ignored after KPBS confirmed that the Marine Corps had recently renewed its contract with Frontwave.
The Coast News reached out to Frontwave and the Marine Corps for comment, but has not heard back. Rep. Mike Levin’s spokesperson declined to comment at this time and is awaiting a briefing for more information. Rep. Darrell Issa did not immediately respond to requests for comment.
