Consumer complaint received 2025-12-02 00:00:00
Product: Checking or savings account — Checking account
Issue: Managing an account — Banking errors
Company: NAVY FEDERAL CREDIT UNION
State: MD

Complaint narrative:
On XX/XX/year>, my federal Social Security XXXX benefit of {$960.00} was deposited into my Navy Federal account. This is confirmed in the official Social Security Benefit Verification Letter dated XX/XX/year> ( showing my monthly XXXX payment of {$960.00} ). 

Immediately after this federal benefit posted, I transferred MY OWN funds to an external account. Navy Federal is now falsely claiming that this transfer was paid using my Optional Overdraft Protection Service, which is completely untrue and contradicted by their own transaction timeline.

On the same date, Navy Federal issued an OOPS Fee Notice stating that the {$960.00} transaction was covered by overdraft protection and charged a {$20.00} fee for it, instead of recognizing that the transfer was made entirely from my Social Security benefits. The OOPS Notice showing this false overdraft classification is located on page XXXX of OOPS Fee Notice XXXX. 

This is a serious violation of multiple federal laws : 1. Social Security Act 42 U.S.C. 407 ( a ) Federal benefits such as SSI can not be seized, misapplied, assigned, or used to cover overdrafts or bank fees. Navy Federals reclassification of my SSI deposit as an overdraft payment is illegal. These funds are protected and can not legally be treated as credit, debt repayment, overdraft coverage, or fee-triggering activity.

2. Electronic Fund Transfer Act ( EFTA ) & Regulation E ( 12 CFR 1005 ) Navy Federal violated Regulation E by : Misrepresenting the source of my funds Misclassifying my federal benefit as overdraft credit Assessing fees against protected federal benefits Failing to provide accurate account disclosures Failing to conduct a proper investigation into my dispute 3. CFPB UDAAP Violations ( 12 U.S.C. 5531 & 5536 ) Navy Federal engaged in : Unfair practices causing harm to a consumer receiving federal benefits Deceptive practices issuing a notice falsely stating that overdraft funds were used when only Social Security funds were available Abusive practices taking advantage of a vulnerable consumer relying on protected federal benefits 4. Failure to Properly Identify and Protect Federal Benefit Deposits Banks are legally required to recognize electronically deposited federal benefits and ensure these funds are not treated as overdraft coverage or fee-generating activity. Navy Federal ignored this requirement and acted contrary to federal protections.

What I Am Requesting Immediate correction of the transaction classification Removal and refund of the {$20.00} OOPS fee Written confirmation that my federal benefits will not be misclassified or used for overdraft in the future Correction of all account records related to this incid
ent Assurance that no further fees will be charged against federal benefit deposits Navy Federals actions present clear violations of federal banking law, consumer protection law, and protections specific to Social Security recipients. I am requesting CFPB intervention and oversight as Navy Federal is mishandling protected federal benefits and issuing misleading account notices

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation