Navy Federal Credit Union (NFCU), the largest credit union in the United States serving military members, veterans, and their families, has faced several lawsuits and regulatory actions in recent years. These legal challenges mainly focus on alleged improper fees, consumer protections, and dispute resolutions, reflecting broader scrutiny of financial institutions’ practices.
Navy Federal Credit Union Lawsuit
One prominent lawsuit involved a customer, Andrew King, who was charged a $15 returned-check fee even though he was not at fault for the check’s failure to clear. King filed a lawsuit alleging that the fee constituted an unfair and unlawful business practice under California’s Unfair Competition Law (UCL) and the federal Consumer Financial Protection Act (CFPA). However, the lawsuit was dismissed on grounds of federal preemption, as state laws regulating account fees do not apply to federal credit unions like Navy Federal.
Additionally, the Consumer Financial Protection Bureau (CFPB) previously initiated enforcement actions against Navy Federal concerning overdraft fee practices. In 2024, the CFPB ordered Navy Federal to refund more than $80 million to customers and impose a $15 million civil penalty for what the bureau deemed illegal overdraft fees. However, in 2025, the CFPB terminated its consent order against Navy Federal and waived alleged noncompliance, effectively dismissing the case.
Key Legal Issues and Regulatory Responses
The legal disputes mainly focus on the fees Navy Federal charged in specific circumstances, the transparency of those fees, and the procedures for fee assessments. Federal regulation of credit unions preempts many state-level consumer protection claims, complicating such lawsuits. Regulatory bodies have emphasized the balance between consumer protection and credit unions’ operational autonomy.
Lawmakers and consumer advocates have expressed concerns over the abrupt dismissal of CFPB’s enforcement, citing potential impacts on military families and veterans who constitute NFCU’s membership.
Recent Developments
The U.S. Court of Appeals for the Ninth Circuit recently affirmed dismissal of state law claims against Navy Federal based on federal preemption statutes. The CFPB’s dismissal of its overdraft fee case followed internal agency decisions prioritizing resources toward urgent consumer threats.
Meanwhile, Navy Federal continues to assert compliance with all applicable laws and regulations. The credit union has apologized for any member inconvenience and reinforced its commitment to member service.
Conclusion
Navy Federal Credit Union’s recent lawsuit and regulatory challenges highlight the complexities of federal preemption in financial services and the ongoing debate over overdraft fee practices. While Navy Federal maintains legal compliance, affected members and consumer advocates continue to press for transparency and fairness in banking fees.
Customers are encouraged to carefully review account agreements and remain informed of their financial service providers’ policies and regulatory updates.
