WASHINGTON–Several former officials from the Consumer Financial Protection Bureau (CFPB) are criticizing the decision by the Bureau to drop its case against Navy FCU over OD fees, including what would have been a $95 million total penalty.
As the CU Daily reported here, the CFPB has moved to dismiss a case that would have required Navy Federal Credit Union to refund $80 million to members for allegedly illegally charging overdraft fees, in addition to paying a $15 million fine.
In a statement, Navy FCU said the CFPB’s move was “appropriate.” It said it has since stopped the practice that led to the CFPB finding.
But former CFPB staff members have suggested that the agency doesn’t seem to living up to its promise to protect troops from financial scams and predatory acts, according to a report by Military.com
“We are at a point where it’s very uncertain whether the Consumer Financial Protection Bureau will ultimately step in on the side of consumers and not take the side of their bank as they did here for the Navy Federal customers,” Eric Halperin, a former enforcement director at the CFPB, told Military.com.
Statement Removed from Site
Military.com noted the CFPB has since removed its press release announcing its 2024 action against the world’s largest credit union.
At that time, the CFPB had stated, “When (members) made purchases with their accounts showing enough money to cover the transaction, the credit union still charged them overdraft fees if the account had a negative balance once the purchase posted to the account, sometimes days later.”
Allison Preiss, a former CFPB official, told Military.com in an interview that the agency has been tracking the practice of overdraft fees for years and its research has shown “that for many large finance financial institutions, overdraft has become a big part of the business model.”
Those interviewed by Military.com said that dropping the settled case is unprecedented and contradicts repeated claims by the Trump administration CFPB leaders that the agency is looking out for troops and veterans.
‘Open Season on Consumer’
“The Trump CFPB has said that they are focused on service members and veterans. … I certainly haven’t seen the evidence yet,” Preiss told Military.com. “I think that the undoing of this case certainly flies in the face of the statements that they’ve made.”
Added Cohen, “This sends a signal to financial predators: It’s open season on the consumer.”
