The Consumer Financial Protection Bureau has officially canceled a $95 million settlement with Navy Federal Credit Union, reversing its prior enforcement action over overdraft fees that the agency previously labeled as illegal. The move marks the latest in a series of settlements and consent orders the Bureau has withdrawn in recent months under new leadership.
Driving the news: An order signed Tuesday by CFPB Acting Director Russell Vought nullified a November 2024 consent order requiring Navy Federal to pay $80 million in consumer redress and a $15 million penalty. That original enforcement action focused on the credit union’s use of “authorized positive, settled negative” overdraft fees, a practice it allegedly employed from 2017 to 2022.
In a separate action also released Wednesday, the CFPB canceled a consent order against Fay Servicing, a mortgage servicing firm. However, that rescission noted the Bureau will still distribute $3 million in redress payments related to that case.
Catch up quick:
- The CFPB’s original order against Navy Federal accused the lender of charging overdraft fees even when accounts showed sufficient funds at the time of purchase, but later fell into the red when transactions posted.
- Consumers were also allegedly charged when Navy Federal’s systems misrepresented the availability of funds from services like PayPal and CashApp.
- The credit union halted the overdraft practice in 2022 and issued partial refunds before the CFPB action.
What they’re saying: A Navy Federal spokesperson welcomed the cancellation: “We firmly believe the CFPB’s decision to terminate the order was appropriate,” adding that the credit union “complied with all applicable laws and regulations at the time and continues to do so.”
Between the lines: This is at least the fourth enforcement action rolled back by the CFPB since May, including settlements with Toyota and Bank of America. The pattern reflects a sharp shift in priorities under Vought’s leadership, who was appointed during the Trump administration and has signaled a focus on concentrating agency resources on what it calls “pressing threats” to consumers.
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