WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) took action against Navy Federal Credit Union for charging illegal overdraft fees. 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 CFPB is ordering Navy Federal to refund more than $80 million to consumers, stop charging illegal overdraft fees, and pay a $15 million civil penalty to the CFPB’s victims relief fund. This is the largest amount the CFPB has ever obtained from a credit union for illegal activity.

“Navy Federal illegally harvested tens of millions of dollars in junk fees, including from active duty servicemembers and veterans,” said CFPB Director Rohit Chopra. “The CFPB’s work to rid the market of illegal junk fees has saved American families billions of dollars.”

Navy Federal Credit Union is the largest credit union in the United States, with headquarters in Vienna, Virginia. The credit union serves active duty military members, veterans, Department of Defense civilian employees, and their families. As of December 2023, Navy Federal had more than $171 billion in assets and more than 13 million members. Navy Federal has 355 branches worldwide, including 175 branches on or near military installations and 26 on overseas military bases.

Through its “Optional Overdraft Protection Service,” known as “OOPS,” Navy Federal charged consumers $20 for most overdraft transactions. The credit union collected nearly $1 billion in overdraft fees from 2017 to 2021.

Members were illegally charged overdraft fees in two ways. First, when they made purchases with their accounts showing enough money to cover the transaction, the credit union still charged them overdraft fees if the account had a negative balance once the purchase posted to the account, sometimes days later. Navy Federal collected an average of $44 million a year in these surprise fees. As early as 2015, federal regulators, including the CFPB and the Federal Reserve, began cautioning financial institutions against charging these surprise overdraft fees.

Second, when customers received money though payment services like Zelle, PayPal, and Cash App, Navy Federal’s systems showed the money as immediately available to spend. However, the credit union failed to disclose that payments received after 10:00 am Eastern (and later, after 8:00 pm Eastern) wouldn't actually post until the next business day. Some customers who tried to use this money were then charged overdraft fees. Through this practice, Navy Federal collected at least $4 million in fees.

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