RSSThe Consumer Financial Protection Bureau recently terminated its consent order against Navy Federal Credit Union and waived any non-compliance allegations against the company.
Acting Director Russell Vought signed a two-page order terminating the enforcement action on July 1. The CFPB, under former Director Rohit Chopra, had fined Navy Federal $95 million last fall for allegedly charging illegal overdraft fees. At the time, the fine was the bureau’s largest against a credit union for illegal activity.
According to the bureau, Navy Federal charged customers surprise overdraft expenses on ATM withdrawals and debit card purchases from 2017-22 through its optional overdraft protection service, even when the accounts had enough funds at the time of the transactions.
Members were reportedly illegally charged overdraft fees in two ways: First, Navy Federal allegedly charged customers overdraft fees when their account had a negative balance once the purchase was posted to the account, not when they made the purchase.
Also, when customers received money through payments services such as PayPal, Cash App and Zelle, Navy Federal’s systems indicated the money could be spent immediately. According to the CFPB, the credit union failed to mention payments not received between 10 a.m.-8 p.m. EST wouldn’t be posted until the next business day. Customers who tried to use the money when it was posted the following business day were subsequently charged overdraft fees.
The largest credit union in the United States, Navy Federal Credit Union is headquartered in Vienna, Va. As of last December, the credit union had $171 billion in assets and more than 13 million members.
