The Consumer Financial Protection Bureau ordered Navy Federal Credit Union to refund more than $80 million in overdraft fees to consumers, change its overdraft practices, and pay a $15 million civil penalty.

Details: According to the CFPB, 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 noted that this is the largest amount it has ever obtained from a credit union for illegal activity.

More: National Credit Union Administration Chairman Todd Harper said Navy Federal’s “authorize positive, settle negative” practices counter to the credit union system’s statutory mission of meeting the credit and savings needs of their members, “especially those of modest means.” Navy Federal is the nation’s largest credit union, with $171 billion in assets.

Ongoing CU Issues: The CFPB penalty comes amid a rising tide of regulatory, media, and consumer skepticism of credit unions, including a CNN report on Navy Federal’s racial disparities in mortgage approval rates.

Recent ICBA Advocacy: ICBA continues working to raise awareness of credit union acquisitions of community banks and insufficient oversight of the industry. For instance, ICBA:

  • Said a regulatory action against VyStar Credit Union for harming consumers through its botched rollout of a new online banking system exemplifies the risks posed by lagging credit union regulation.

  • Recently called on the NCUA to curb the abuse of its subordinated debt rule, released polling showing U.S. adults increasingly support equal consumer protections for credit union customers, and lauded the FDIC’s ICBA-advocated inclusion of credit unions in its merger guidance.

Grassroots Resources: Community bankers can use ICBA’s Be Heard grassroots action center to call on members of Congress to hold a hearing on credit union policy. Additional resources are available on the ICBA website.