The Consumer Financial Protection Bureau (CFPB) today took action against Navy Federal Credit Union for charging illegal overdraft fees from 2017 to 2022.
Navy Federal imposed unexpected fees on ATM withdrawals and debit purchases, even when account balances initially showed enough funds. The CFPB is requiring Navy Federal to refund over $80 million to affected customers, cease these fees, and pay a $15 million penalty.
Navy Federal, the largest U.S. credit union, serves military members, veterans, and Department of Defense employees, and has over $171 billion in assets and 13 million members.
Through its “Optional Overdraft Protection Service” (OOPS), Navy Federal charged $20 per overdraft and collected nearly $1 billion in fees from 2017 to 2021. Customers were charged fees when transactions posted days after purchases, despite showing sufficient funds, or when payments from services like Zelle or PayPal were delayed, unbeknownst to them.
The CFPB’s action orders Navy Federal to:
- Refund Overdraft Fees: Over $80 million will be refunded to consumers for improperly charged fees.
- Ban Certain Overdraft Fees: Prohibits fees when accounts initially showed sufficient funds or when delayed payments posted.
- Pay a $15 Million Fine: Navy Federal must contribute to the CFPB’s victims relief fund.
The CFPB is focusing on combatting surprise fees and proposed a rule limiting overdraft fees in early 2024.