Navy Federal Credit Union Charges ‘Abusive’ Foreign Transaction Fees on Purchases Made in US, Class Action Lawsuit Claims

Navy Federal Credit Union’s (NFCU) “unfair and unconscionable” practice of charging foreign transaction fees (FT fees) on purchases made in the United States breaches consumer contracts, a new class action lawsuit alleges.

The class action lawsuit was filed in Virginia on June 15 by lead Plaintiffs Siobhan Morrow and Tracee Le Flore, who allege that NFCU, besides being “deceptive, unfair, and unconscionable, this practice breaches contractual promises made in the Credit Union’s adhesion contracts.”

According to the claim, NFCU’s account documents say that FT fees will only be assessed when an account holder uses their debit card in a foreign country, specifically saying it will only charge FT fees on Point-of-Sale and ATM transactions “made in foreign countries.”

However, Morrow says that in July 2020, she purchased clothing from Chicme.com for $137.56, while in San Diego, understanding the transaction to be made in the United States. Later, Morrow learned that NFCU assessed a one percent FT fee on her transaction.

“Plaintiff Morrow received no warning that she would be charged a FT Fee on a purchase made while she was in the United States,” the claim states.

“To the contrary, Plaintiff Morrow reasonably understood from the Account Documents that she would only be charged an FT Fee on transactions made while she was traveling abroad.”

Similarly, Le Flore made payments in April 2020 to Freelancer.com for $256.05, $7.97, and $10.53 while in Memphis, thinking the purchase was being made in the U.S. However, she later found she had been charged a one percent FT fee on each of the transactions.

On top of the fact there is “zero indication anywhere” in contractual documents that someone in the U.S. will incur a FT fee for a purchase, an online debit card transaction made by an accountholder physically located in the United States is not “made” in a foreign country, the class action lawsuit argues.

“Nowhere does NFCU disclose that the Credit Union will consider a foreign transaction to be ‘made’ where the merchant is located as opposed to where the accountholder is located,” the claim states.

“This counterintuitive interpretation defies common sense. Indeed, an accountholder often has no idea where an online merchant is located, nor should she be expected to know.”

According to Morrow and Le Flore, NFCU breached its contracts with the two when it charged them FT fees, violating NFCU’s contract and the covenant of good faith and fair dealing.

The claim adds that the “abusive practice” of charging FT fees is not universal, and banks that do charge the fees declare how they do so in their account documents.

Morrow and Le Flore want to represent anyone in the United States who was wrongly charged an FT fee by NFCU. They are suing for breach of contract and seek certification of the class, monetary damages, restitution, declaratory relief, interest, legal fees, and a jury trial.

NFCU isn’t the only bank to face legal action over its charging of fees. In June, Zions was hit with a class action lawsuit for allegedly charging customers $35 overdraft fees, despite accounts having ample money to cover transactions. 

Have you ever been wrongly charged an FT fee? Let us know in the comments section!

Morrow and Le Flore are represented by Heather Whitaker Goldstein and David M. Wilkerson of The Van Winkle Law Firm, Jeffrey Ostrow and Jonathan M. Streisfeld of Kopelowitz Ostrow Ferguson Weiselberg Gilbert, Todd Carpenter of Carlson Lynch Sweet Kilpela & Carpenter LLP, and Jeffrey Kaliel and Sophia Gold of Kaliel PLLC.

The Navy Federal Credit Union FT Fee Class Action Lawsuit is Morrow, et al., v. Navy Federal Credit Union, Case No. 1:21-cv-00722 , in the U.S. District Court Eastern District Of Virginia Alexandria Division.

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