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Latest CFPB move under Trump to nix existing settlements

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Comes nearly three months after pledge to focus on

protecting

military consumers

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Lender says it was always in compliance

WASHINGTON, July 1 (Reuters) - The top U.S. watchdog

agency for consumer finance this week canceled a $95 million

settlement reached last year with Navy Federal Credit Union, a

lender officials in the prior administration had accused of

illegally charging surprise overdraft fees, according to an

order published Wednesday.

In a separate order also published Wednesday, the CFPB

likewise canceled a November action against the nonbank mortgage

company Fay Servicing over alleged violations of mortgage

servicing laws.

The decisions were the latest moves by the U.S. Consumer

Financial Protection Bureau to undo cases already concluded by

the agency, which President Donald Trump has sought to shrink

drastically if not eliminate outright. The CFPB last month

exited its corporate monitorship of Bank of America ( BAC ) from

a 2023 settlement and in May canceled a settlement with Toyota

from the same year over allegations of pushing car buyers into

unwanted product bundles.

Representatives for both companies welcomed the news, saying

they were committed to properly serving their customers.

"Navy Federal complied with all applicable laws and

regulations at the time and continues to do so. We firmly

believe the CFPB's decision to terminate the order was

appropriate," a spokesperson for the credit union said.

The CFPB did not immediately respond to requests for

comment.

Navy Federal primarily services military service members,

veterans, civilian employees of the military and their

families. In an internal memo in April, CFPB Chief Legal Officer

Mark Paoletta said the agency would focus its reduced resources

on "pressing threats to consumers, particularly service members

and their families and veterans."

In November, the CFPB had ordered Navy Federal to pay $95

million, including $80 million in redress to consumers over

allegations the credit union charged depositors whose accounts

had sufficient funds at the time of a purchase but fell into the

red by the time the charge later posted to their accounts. The

CFPB also said depositors paid fees if they drew on funds

received via services like PayPal and CashApp and the credit

union's system incorrectly told them the funds were immediately

available to spend.

In an order signed Tuesday, CFPB acting Director Russell

Vought said the November order was terminated, including

provisions requiring redress payments to allegedly harmed

consumers. However the similar order concerning Fay Servicing

indicated the CFPB would distribute $3 million in redress

payments specific to that case.

(Editing by Stephen Coates)