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UPDATE: A quote from the National Credit Union Administration in this article has been edited to remove the word “misleading.”

Navy Federal, the nation’s largest credit union with assets totaling $181 billion, must pay $95 million in refunds and penalties after the Consumer Financial Protection Bureau cited it for charging fees. discovered illegally.

Navy Federal, based in Vienna, Virginia, “has reaped tens of millions of dollars in unwanted fees, including from active-duty military members and veterans,” CFPB Director Rohit Chopra said in a statement Thursday. press release. The agency, which led a determined campaign against overdraft practices, cited two practices in particular: charging fees when a member had sufficient funds at the time of purchase and when a member relied on a peer-to-peer payment that did not have yet been processed.

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The CFPB has prohibited Navy Federal from charging overdrafts in similar situations in the future. The credit union must also repay $80 million to members and pay a $15 million penalty – the largest assessment ever imposed by the CFPB on a credit union. The CFPB’s enforcement action earned Navy Federal a harsh reprimand from National Credit Union Administration Chairman Todd Harper.

“The positive and negative practices authorized by Navy Federal and the subsequent imposition of overdraft fees were not only unfair, but they also caused significant harm to consumers,” NCUA President Todd Harper said Thursday in a press release. “In many cases, consumers were charged overdraft fees, completely ignoring Navy Federal’s complex processes related to posting transactions and whether they would incur overdraft fees.”

In a statement Thursday, Navy Federal said it fully cooperated with the CFPB’s investigation and accepted the fine. Navy Federal, however, added that it believes its overdraft program complies with “all applicable federal laws and regulations.”

“This settlement allows us to focus on serving our members and their families,” Navy Federal said.

Navy Federal’s fine comes after a number of banks found themselves caught in the CFPB’s overdraft trap. Bank of Regions, TD Bank And Atlantic Union Bank, based in Richmond, Virginia were fined.

CFPB unveiled a proposal in January, it would classify overdraft as an extension of credit and cap fees charged by the largest financial institutions, or those with more than $10 billion in assets, at $14. The banks were fiercely opposed to this project. In a Opinion article for the month of AugustLindsey Johnson, president and CEO of the Consumer Bankers Association, wrote that the CFPB’s overdraft hostility would result in a thinner cushion for cash-strapped consumers who rely on overdrafts to make ends meet .

“Many consumers have also reported that they lack credit alternatives, meaning overdraft services allow them to pay their bills without having to sell their household goods or borrow from friends or family.” , Johnson wrote.

Other analysts say that financial institutions, including some credit unionsreaped an overdraft windfall, saddling low-income consumers and service members tens of millions of dollars in fees. Harper has made scrutinizing credit unions’ overdraft practices a priority for the NCUA. Earlier this year, for the first time, the agency required credit unions with more than $1 billion in assets to disclose overdraft data in their call reports.

In its most recent call report, Navy Federal said it collected $250.5 million in overdraft fees during the first nine months of 2024. It collected nearly $1 billion in overdraft fees from 2017 to 2021, according to the CFPB.

For its part, Navy Federal said its optional overdraft protection program offers its members an alternative to payday lenders and other more costly debt. It added that it offers programs aimed at helping members better organize their finances and reduce their reliance on overdrafts. Other benefits, including dividend payments and reduced interest rates, earn or save members more than $450 annually, according to Navy Federal.

The Navy’s action marks the second recent, high-profile enforcement action led by the CFPB against a credit union. Last week was sanctioned Vystar Credit Union, with assets of $14.7 billion in Jacksonville, Florida, for issues during the 2022 rollout of a new operating system that limited members’ access to their accounts for months.