CFPB Dismisses Lawsuit Against Navy Federal Credit Union
NEW YORK (AP) — The Navy Federal Credit Union is no longer required to refund $80 million to military personnel and women for previously charged claims. This decision comes after the Consumer Financial Protection Bureau (CFPB), under leadership connected to Donald Trump, moved to dismiss the lawsuit.
This development illustrates how the current CFPB is rolling back initiatives that were established under President Biden, even when wrongdoers are willing to offer compensation to those affected.
The origins of the case can be traced back to the latter part of 2024, revolving around what’s referred to as “approved aggressive overdraft fees.” This situation arises when a bank approves a debit card transaction, but a few days later, the original transaction may resolve, leading to overdraft charges if the account has insufficient funds. Between 2017 and 2022, Navy Federal allowed these types of overdraft fees, later halting the practice and issuing refunds to some impacted customers.
Previously, as part of a settlement, Navy Federal would have faced a $15 million penalty and the obligation to refund the $80 million in overdraft fees it improperly collected. At that time, the credit union expressed its commitment to cooperating with the CFPB investigation, asserting that they have consistently complied with applicable laws and regulations.
The CFPB has not provided a clear rationale for withdrawing the consent order. Under the direction of Russell Vert, the president’s Budget Director, the agency has rescinded several consent orders, effectively undoing previous settlements with financial service providers. The rescinded order stated that Navy Federal had agreed to withdraw the settlement.
In their defense, Navy Federal supported the CFPB’s decision regarding overdrafts. They stated, “Our commitment to prioritizing and protecting our members is central to who we are. The overdraft program allows members to make daily purchases without relying on long-term debts or payday lenders.”
Navy Federal is the largest credit union in the U.S., boasting around 14 million members and $180 billion in assets. If classified as a traditional bank, it would stand as the 24th largest in the nation by assets.
While the CFPB’s mission and scope have been significantly revised, the agency has previously indicated that economic challenges remain for military personnel and women. The CFPB has not yet responded to requests for further comment.
