The Consumer Financial Protection Bureau today fined Navy Federal Credit Union for illegally charging customers overdraft fees, calling it the largest penalty the agency has levied against a credit union for illegal activities. 

The $177 billion, Vienna, Va.-based credit union allowed customers to make transactions beyond their available balances, then charged them surprise overdraft fees, the bureau said in a release.

Navy Federal must return $80 million to customers who were charged overdraft fees in error and pay $15 million in fines to the CFPB’s victim relief fund. 

Navy Fed showed customers that funds were immediately available when they received payments on peer-to-peer platforms like Zelle and PayPal, the release stated. However, funds received after 10 a.m. ET wouldn’t post until the next business day. 

“Navy Federal illegally harvested tens of millions of dollars in junk fees, including from active duty service members and veterans,” CFPB Director Rohit Chopra said in the release. 

The credit union illegally collected more than $1 billion in overdraft fees, between 2017 and 2021, the release stated. 

A Navy Federal spokesperson declined to answer questions about the penalty from BAN, but in a statement, the credit union said it has: 

• Invested in an “optional overdraft protection program”; 

• Enabled automatic overdraft fee refunds since January 2023; and 

• Planned to remove insufficient fund fees associated with personal checking accounts, starting in the first quarter of 2025. 

Register here for early-bird pricing for Bank Automation Summit U.S. 2025, taking place March 3-4 in Nashville, Tenn. View the full event agenda here.