Navy Federal Credit Union to Pay $24.5 Million to Settle a Class Action Overdraft Fees Lawsuit

A settlement has been reached in a class action lawsuit claiming that Navy Federal Credit Union breached its contract with member checking account holders and improperly assessed and collected overdraft fees on certain transactions.

Navy FCU maintains they did nothing wrong, but has agreed to settle the lawsuit to avoid the cost, delay, and uncertainty of litigation. The court made no decision which side is right. Navy FCU also agreed to pay up to $500,000 towards Settlement Administration Cost. In this case, the class action settlement is with checking account holders, who were charged overdraft fees under the credit union’s Optional Overdraft Protection Service between July 22, 2012 and November 20, 2017.

The lawsuit was filed by plaintiffs Jenna Lloyd and Jamie Plemons on behalf of others in the class. The plaintiffs alleged that the credit union assessed fees on debit card transactions deceptively. The case was originally filed in the U.S. District Court for the Southern District of California. The plaintiffs argued the Consumer Financial Protection Bureau (CFPB) has labeled this practice deceptive, and that Navy FCU had violated its own contractual agreements when it assessed overdraft fees in this manner. Class members do not need to file a claim to obtain a payment or account credit. If the Navy FCU overdraft fees class action settlement is approved, payment will be sent automatically to class members.

It was estimated that if the class action lawsuit went to trial, recoverable damages would have been almost $60 million. The settlement would provide plaintiffs with a recovery of between 30 and 40 percent of potential damages.

The final approval hearing is set for May 20, 2019.

Click here for the settlement documents.