Navy Federal Credit Union will no longer be required to refund $80 million in overdraft fees to service members after the Consumer Financial Protection Bureau (CFPB), now led by the Trump administration, moved to dismiss the case.
The case centered on the practice of “authorized positive overdraft fees,” where customers are charged fees after transactions are initially approved but later overdraw their accounts when the transaction settles. The CFPB’s reversal marks a significant departure from previous efforts to enforce consumer protection rules, particularly those affecting military personnel.
Trump-Led CFPB Reverses Settlements, Eases Oversight on Navy Federal Overdraft Practices
This case is one of several instances where the Trump-led CFPB has rolled back actions initiated during the Biden administration. Even when financial institutions had agreed to settlements, including compensation to consumers, the bureau has been undoing prior enforcement actions.
Under the original terms of the settlement reached in late 2024, Navy Federal was to pay a $15 million penalty in addition to refunding $80 million to impacted members. The reversal reflects a broader shift under current leadership toward reduced regulatory oversight.
Trump-Era CFPB Drops $80M Refund Order for Navy Federal, Easing Oversight on Overdraft FeesThe controversy stems from overdraft practices that occurred between 2017 and 2022. Navy Federal had been charging overdraft fees on debit card transactions that were authorized when there were sufficient funds, but later settled when the accounts lacked enough money. This practice was flagged as illegal by the CFPB, prompting the investigation and eventual settlement agreement. Navy Federal had already refunded some customers and stated it cooperated fully with the bureau.
Leadership Shift at CFPB Spurs Withdrawal of Navy Federal Consent Order, Raises Questions
The CFPB did not provide a detailed explanation for why it dropped the consent order. The decision was signed off under the leadership of Russell Vought, President Trump’s budget director, who is also serving as acting head of the CFPB.
Since assuming control, Vought has overseen the withdrawal of several consent orders and settlements, reshaping the bureau’s enforcement priorities. The formal documentation showed that Navy Federal agreed to the withdrawal, which nullified its obligation to provide further financial redress.
In a public statement, Navy Federal defended its overdraft policy and praised the CFPB’s decision to dismiss the case. The credit union emphasized that its overdraft services help members avoid long-term debt or payday lending, and that it has always complied with relevant laws.
As the largest credit union in the U.S., with 14 million members and $180 billion in assets, Navy Federal’s practices affect a significant portion of the military community. Despite claims from the CFPB that military financial issues remain a priority, its recent actions suggest otherwise, as the bureau declined to comment further on the decision.
