The US Consumer Financial Protection Bureau (CFPB) has dismissed a consent order previously brought against Navy Federal Credit Union, the largest financial cooperative in the US with $180 billion in assets, concerning undue overdraft fees.
The lawsuit had been active since 7 November 2024, and alleged Navy Federal of charging overdraft fees deemed by the CFPB to be illegal, ordering the credit union to return more than $80 million to affected customers and pay an additional $15 million civil penalty to the victims relief fund.
“From 2017 to 2022, Navy Federal charged customers surprise overdraft fees on certain ATM withdrawals and debit card purchases, even when their accounts showed sufficient funds at the time of the transactions,” the regulator said in November, branding the order “the largest amount the CFPB has ever obtained from a credit union for illegal activity”.
However, in the latest turn of events, the CFPB has now exonerated Navy Federal over the charge, stating in a filing dated 1 July: “The Bureau hereby terminates this Consent Order. The Bureau also waives any alleged noncompliance therewith.” The termination came into effect on 31 June, with the regulator providing little justification for the climb down.
In a statement sent to FinTech Futures following the U-turn, a Navy Federal spokesperson said: “Navy Federal’s commitment to prioritize and protect our members is core to who we are. Our overdraft program allows our members to make necessary, everyday purchases without going into long-term debt or turning to payday lenders.”
“Navy Federal complied with all applicable laws and regulations at the time and continues to do so,” the spokesperson continues. “We firmly believe the CFPB’s decision to terminate the order was appropriate.”
The CFPB is currently being led by Office of Management and Budget director Russell Vought who, since taking office as acting director in February, has dropped a number of high-profile cases brought forward by his predecessor Rohit Chopra.
These include a $3 million order brought against mortgage servicer Fay Servicing in August over alleged violations to mortgage servicing laws, terminated this week, as well as a savings account lawsuit against Capital One, which was cancelled in March.
Source: https://www.fintechfutures.com/
