CFPB has 'literally stolen millions of dollars,' Consumer Federation charges
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Consumer Federation of America slams CFPBs reversal of a $95 million consent order against Navy Federal Credit Union for illegal overdraft fees.
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Advocates accuse the agency of betraying servicemembers and demand an accounting of $80.6 million in promised restitution.
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Navy Federals controversial overdraft practices allegedly cost military families millions through deceptive balance reporting.
The Consumer Financial Protection Bureaus (CFPB) abrupt decision to withdraw a sweeping 2024 consent order against Navy Federal Credit Union (NFCU) has ignited fierce criticism from consumer advocates, who warn that the move leaves millions of dollars in restitution for armed forces service members and Defense Department employees in jeopardy.
The CFPB cannot reverse this consent order and simultaneously claim that it is prioritizing the interests of servicemembers, said Adam Rust, director of financial services for the Consumer Federation of America (CFA). They have literally stolen millions of dollars meant to compensate servicemembers, their families, and employees of the Department of Defense for Navy Federals illegal overdraft practices.
At the heart of the controversy is the CFPBs now-rescinded action from earlier this year, which under former Director Rohit Chopra imposed $95 million in penalties against NFCU.
$80.6 million in direct restitution
The order required $80.6 million in direct restitution to consumers and $15 million for the CFPBs victim relief fund. Navy Federal, which serves active-duty military, veterans, and DoD employees, collects more than $235 million annually in overdraft fees an amount that dwarfs most other financial institutions nationwide.
Much of the regulatory scrutiny focused on NFCUs practice of charging so-called authorize positive, settle negative (APSN) fees. Under this system, a customers account balance might appear sufficient to cover a purchase, only for the bank to reorder transactions at days end in a way that triggers overdraft charges. The same pattern occurred with peer-to-peer payments, where deposits labeled as available werent actually posted until the following business day, causing unsuspecting consumers to incur fees if they spent those funds.
APSN fees accounted for about 20% of all overdraft charges levied by NFCU, according to the CFPBs original findings.
The CFA is now demanding transparency, calling on both the CFPB and NFCU to publicly disclose how much of the promised $80.6 million in consumer restitution remains unpaid following the withdrawal of the order.
Other pullbacks affecting service members
The controversy arrives amid other recent moves by the CFPB to pull back from enforcement efforts in sectors affecting service members. In May, the agency announced it would end supervision of the Military Lending Act part of a broader trend of shifting priorities under new leadership.
The Military Lending Act (MLA)when it was still being enforced protectedactive-duty service members and their dependents from predatory lending practices by limiting the interest rates and fees lenders can charge on certain types of loans.It capped theMilitary Annual Percentage Rate(MAPR) at 36%.The MLA also prohibitedmandatory arbitration, prepayment penalties, and mandatory allotments, among other protections.
As the CFPB defends its decisions by citing a focus on supporting hard-working American taxpayers, servicemen, veterans, and small businesses, critics argue the agencys actions are leaving those very groups vulnerable to financial harm.
The fate of the millions of dollars once earmarked for military families now hangs in the balance, with consumer groups vowing to keep pressure on regulators and Navy Federal for answers.
Posted: 2025-07-02 15:43:29
