Consumer complaint received 2025-08-02 00:00:00
Product: Checking or savings account — Checking account
Issue: Problem caused by your funds being low — Overdrafts and overdraft fees
Company: NAVY FEDERAL CREDIT UNION
State: VA

Complaint narrative:
To : CFPB Subject : Federal Regulation Needed for Overdraft Programs Masquerading as Protection To Whom It May Concern, I am writing to file a formal complaint and policy proposal regarding overdraft programs like XX/XX/XXXX( Overdraft Protection Service ) that are currently offered by various banking institutions. While these programs claim to provide short-term financial relief by allowing customers to overdraw their accountsoften up to $ XXXXwith a promise of repayment within 30 days, they in practice function as high-fee traps that punish the very people they claim to help. 

Here is how these programs currently operate : A bank allows a customer to overdraft up to {$500.00}. 
The customer is told they have 30 days to bring their account current. 
Despite the supposed grace period, the bank charges a {$20.00} fee for each overdraft transactioneven for amounts as small as {$2.00} or {$3.00}. 
In many cases, banks reorder transactions to maximize the number of overdrafts in a single day.

This fee structure can result in multiple {$20.00} charges in one day, potentially totaling {$100.00} or more, even when the total negative balance is well under the authorized {$500.00}.

This is functionally legalized predatory lending. These practices are : Deceptive : A 30-day repayment window implies leniency, not immediate financial penalty.

Regressive : The flat fees disproportionately hurt low-income individualsthose least likely to recover quickly.

Exploitative : The program invites account holders to overdraw, then penalizes them for doing so.

Contradictory : The name XX/XX/XXXXsuggests an accidental mistake, but the bank profits from repeat usagetreating it as a business model, not an exception.

I am calling for immediate federal regulation and standardization of any overdraft program that offers a defined buffer ( such as {$500.00} ) with a repayment window. Specifically, I propose : Proposed Federal Guidelines for XXXXStyle Overdraft Programs 1. Fee Moratorium Period : No overdraft fee may be charged unless the negative balance is not resolved within 30 days.

2. Fee Cap : No more than one overdraft fee per day, regardless of transaction count.

3. Micro-Transaction Protection : Any overdraft under {$20.00} should be waived once per month.

4. Interest Over Fee : If unpaid after 30 days, interest ( no greater than 5 % APR ) may be charged in lieu of punitive flat fees.

5. Transparency & Notification : Real-time notification for each overdraft Display of total owed, due date, and current OOPS balance 6. Ban on Transaction Reordering : Banks must process debits chronologically, not by size, to prevent fee-stacking.

These basic protections would restore the intent of the programtemporary breathing roomnot a revenue stream extracted from vulnerable customers.

This issue disproportionately affects people living paycheck-to-paycheck and directly contributes to cycles of debt and financial instability. Banks should not be allowed to offer what appears to be a lifeline, only to turn it into an anvil.

Thank you for your time and your attention to this issue. I am happy to provide testimony, data, or examples from my own experience as needed. 

Sincerely, XXXX XXXX XXXX XX/XX/XXXXXXXX, VA

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