The Consumer Financial Protection Bureau said Tuesday it has terminated its overdraft fee-related consent order against Navy Federal Credit Union and waived any alleged non-compliance.
The CFPB, under former director Rohit Chopra, had ordered the Vienna, Virginia-based Navy Federal to pay more than $95 million for “illegal surprise overdraft fees” – the largest penalty ever against a credit union for such activity. The credit union was required to pay a civil penalty of $15 million and refund $80 million in illegally paid overdraft fees.
The two-page order termination, signed by the CFPB’s Acting Director Russ Vought, did not state any specific reason. Navy Federal had earlier said it “fully cooperated” with the agency’s investigation.
“Navy Federal’s commitment to prioritize and protect our members is core to who we are. Our overdraft program allows our members to make necessary, everyday purchases without going into long-term debt or turning to payday lenders,” a credit union spokesperson said in a statement seen by Banking Dive. “Navy Federal complied with all applicable laws and regulations at the time and continues to do so. We firmly believe the CFPB’s decision to terminate the order was appropriate.”
In a separate move, the CFPB on Tuesday terminated its order against Fay Servicing, noting that the mortgage servicer had fulfilled several obligations, including paying a civil penalty of $2 million and $3 million to the CFPB for bureau-administered consumer restitution. The CFPB will distribute the amount to consumers “consistent with the terms of the order.”
Between 2017 and 2022, the credit union charged customers 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 under Chopra said. The CFPB, under Chopra, noted the bureau’s efforts to tackle “junk fees” saved American families billions.
But Vought’s CFPB has taken a different perspective. “The more we uncover at CFPB, the more we see how this agency was weaponized against targeted Americans,” Vought said in a statement, while seeking to vacate a redlining order against mortgage lender Townstone Financial.
However, the CFPB’s attempt to undo the Biden-era redlining settlement against Townstone Financial backfired after a federal judge denied the motion to dismiss the case, noting it would “erode public confidence in the finality of judgments.”
The CFPB’s latest terminations follow other efforts to overturn Biden-era consent orders. Last month, the CFPB vacated Bank of America’s mortgage-related consent order three years early. The lender allegedly failed to collect the required demographic data from mortgage applicants but blamed the applicants for the lack of data, stating that they chose not to respond. Bank of America paid $12 million in 2023 to settle the allegations without admitting any wrongdoing.
In a similar move, the bureau also terminated a consent order against Mississippi-based Trustmark Bank, 17 months earlier than planned, over allegations of redlining.
The CFPB also amended an earlier consent order against fintech Wise regarding its remittance practices and reduced the nearly $2.025 million penalty to $45,000.
The agency itself has grabbed attention over significant workforce reduction plans and efforts to cut off funding. Vought has attempted to reduce CFPB staff by approximately 90%. A provision in President Donald Trump's One Big, Beautiful Bill that would have eliminated the CFPB's budget was recently blocked. Senate parliamentarian Elizabeth MacDonough ruled the provision violated the Byrd Rule.
The Senate Bankig Committee came up with an updated version of the bill that would cap the CFPB’s access to funding at 6.5% of the Federal Reserve operating budget - down from its current limit of 12%.
