In a notable policy reversal, the Consumer Financial Protection Bureau (CFPB) drops Consumer Financial Protection Bureau under President Donald Trump’s administration has dismissed a $95 million case against Navy Federal Credit Union. The case, originally initiated under President Biden’s leadership, had required the credit union to refund $80 million in overdraft fees to servicemen and women and pay a $15 million penalty.
The case centered around the practice of “authorized positive overdraft fees,” in which banks approve transactions but later charge overdraft fees if the customer’s account lacks sufficient funds at the time the transaction is finalized. Navy Federal was found to have used this practice between 2017 and 2022. Although the institution later stopped the fee charges and voluntarily refunded some affected customers, the initial settlement required full redress.
Now, that agreement has been quietly withdrawn. The CFPB, led by acting director and budget chief Russell Vought, offered little explanation for reversing the decision. The move is part of a broader trend by the current administration to unwind enforcement actions initiated by its predecessor.
Navy Federal Defends Practices After CFPB Drops $95M Overdraft
Following the CFPB’s dismissal of the consent order, Navy Federal Credit Union expressed support for the bureau’s decision. In a statement, the organization emphasized its compliance with federal regulations and defended its overdraft program, framing it as a helpful tool for members facing short-term financial needs.
“Navy Federal’s commitment to prioritize and protect our members is core to who we are,” the credit union stated. “Our overdraft program allows our members to make necessary, everyday purchases without going into long-term debt or turning to payday lenders. We complied with all applicable laws and firmly believe the CFPB drops decision was appropriate.”
Navy Federal is the largest credit union in the United States, boasting over 14 million members and managing more than $180 billion in assets. If categorized as a traditional bank, it would rank as the 24th largest in the country by asset size.
Concerns Over Changing Regulatory Direction
The reversal has sparked concern among consumer advocates and financial watchdogs, especially given its implications for military personnel, the very demographic the CFPB has long committed to protect. The Bureau has historically prioritized safeguarding service members from exploitative financial practices, and this latest move suggests a shift in focus under the current leadership.
Since taking over, Vought has overseen the withdrawal of several other consent orders and settlements with financial institutions, signaling a more industry-friendly regulatory approach. Critics argue that such decisions undermine accountability, even in cases where financial entities had already agreed to provide restitution.
Despite these concerns, the CFPB drops has not issued a detailed public statement explaining the rationale for this decision, and no new enforcement action is expected. As for service members affected by the overdraft charges, no further compensation appears forthcoming under the current regulatory stance.
Visit Enterprise Wired for most recent information.
