Navy Federal Lawsuit, $1.7M EFTA Class Action Settlement, Claim Deadline February 4, 2026—What Members Must Know
Navy Federal Credit Union agreed to pay $1.7 million to resolve claims it violated federal law by denying members’ fraud claims without proper explanation. The final approval hearing is scheduled for February 4, 2026, with payments distributed approximately 30 days after court approval.
What Is the Navy Federal Lawsuit About?
The class action lawsuit, filed as Stephenson v. Navy Federal Credit Union (Case No. 3:23-cv-01851) in federal court, alleges the nation’s largest credit union violated the Electronic Funds Transfer Act. According to court documents, Navy Federal denied members’ claims of unauthorized electronic fund transfers between October 10, 2022 and August 20, 2025 without providing sufficient written explanations or supporting documents.
Plaintiffs Jeffrey Stephenson and Billy Smith II claimed Navy Federal’s practices left members unable to understand why their fraud claims were rejected. The credit union allegedly failed to provide the documentation members requested showing how it reached its denial decisions.
Navy Federal denies all wrongdoing but agreed to settle to avoid litigation costs and delays. The settlement received preliminary court approval on September 12, 2025.
Which Legal Claims Were Brought?
The lawsuit centers on violations of the Electronic Funds Transfer Act, a federal consumer protection law requiring financial institutions to properly investigate and respond to unauthorized transaction claims.
Under EFTA regulations, banks and credit unions must provide written explanations when denying fraud claims. The law also requires institutions to produce supporting documents upon request. Plaintiffs argued Navy Federal systematically violated both requirements.
The case also alleged breach of Navy Federal’s account agreement with members. Court filings state the credit union’s own contract promised fair handling of unauthorized transaction disputes.
Who Qualifies for the Settlement?
Two settlement classes were established. The Written Explanation Settlement Class includes all Navy Federal accountholders whose unauthorized electronic fund transfer claims were denied between October 10, 2022 and August 20, 2025.
The Document Request Settlement Subclass covers members within the main class who requested documents Navy Federal relied on when denying their claims but never received them.
Navy Federal serves over 14 million members, primarily active-duty military, veterans, and their families. The settlement potentially affects thousands of members who experienced denied fraud claims during the covered period.
How Much Will Members Receive?
Settlement class members who submit valid claim forms receive equal pro rata payments from the net settlement fund. Payment amounts depend on the total number of approved claims after deducting administration costs and attorneys’ fees.
Current Navy Federal accountholders receive payments as direct account credits. Former members receive checks or electronic payments based on their preference indicated on the claim form.
According to settlement documents, exact payment amounts will be calculated by dividing the net fund by the number of valid claims. Early estimates suggest payments could range from modest amounts to several hundred dollars per claimant, depending on participation rates.
What Are the Important Deadlines?
The claim submission deadline was December 18, 2025. Members who missed this deadline cannot participate in the settlement. The exclusion deadline to opt out of the settlement was December 3, 2025.
The final approval hearing is scheduled for February 4, 2026. Judge will decide whether to grant final approval and allow payments to begin. Settlement payments will be distributed approximately 30 days after final approval and resolution of any appeals.
What Changes Must Navy Federal Make?
Beyond monetary payments, Navy Federal agreed to update its policies and procedures for handling unauthorized transaction claims. The credit union must implement new practices ensuring members receive adequate written explanations when fraud claims are denied.
Navy Federal also committed to providing requested supporting documents to members. These changes aim to prevent future EFTA violations and improve transparency in fraud dispute handling.
The policy updates represent significant operational changes for the nation’s largest credit union. Members reporting unauthorized transactions should see improved communication about denial decisions going forward.
How Does This Compare to Other Navy Federal Lawsuits?
Navy Federal currently faces multiple legal challenges beyond the EFTA settlement. The credit union previously settled a $5.5 million class action over International Service Assessment fees charged on domestic purchases between August 2016 and March 2023.
In February 2024, nine plaintiffs filed discrimination allegations claiming Navy Federal systematically denied mortgages to minority borrowers at higher rates than white applicants. The Fourth Circuit Court of Appeals recently revived portions of that case on February 10, 2026, allowing injunctive relief claims to proceed.
The CFPB dropped an $80 million overdraft fee case against Navy Federal in July 2025. These parallel legal actions demonstrate increased scrutiny of the credit union’s practices across multiple areas.
What Should Affected Members Do Next?
Members who submitted claims by the December 18, 2025 deadline should monitor their accounts or mail for settlement payments after the February 4, 2026 hearing. Current members will see direct credits to their Navy Federal accounts approximately 30 days post-approval.
Former members should ensure the settlement administrator has correct mailing addresses or electronic payment information. Contact Kroll Settlement Administration at 833-621-8312 with address updates or claim status questions.
Members who opted out of the settlement retain the right to pursue individual lawsuits. Consult a consumer rights attorney to discuss whether individual legal action makes sense for your situation.
How to Track the Case Status
The official settlement website is StephensonEFTALitigation.com. This court-approved site provides updates on hearing dates, settlement approval status, and payment distribution timing.
Court documents for Stephenson v. Navy Federal Credit Union (Case No. 3:23-cv-01851) are available through PACER, the federal court electronic filing system. Monitor docket entries for final approval orders and appeals.
Class members can also check Navy Federal Credit Union Class Action Lawsuit updates covering the EFTA settlement alongside other ongoing legal matters affecting the credit union.
Where to Find Legal Help
Consulting an attorney may be advisable if you experienced significant losses from denied fraud claims. Consumer protection lawyers can evaluate whether individual legal action could recover more than the class settlement.
Law firms representing the plaintiffs include Edelsberg Law P.A., Shamis & Gentile P.A., and Kaliel Gold PLLC. These firms specialize in consumer financial protection cases and EFTA violations.
The Consumer Financial Protection Bureau provides resources explaining EFTA rights at consumerfinance.gov. Members can also file complaints about financial institutions through the CFPB’s online portal.
FAQs
What is the Navy Federal EFTA lawsuit about?
The lawsuit alleges Navy Federal violated the Electronic Funds Transfer Act by denying members’ unauthorized transaction claims without providing adequate written explanations or supporting documents between October 2022 and August 2025.
Who are the parties in this case?
Plaintiffs Jeffrey Stephenson and Billy Smith II represent the class against defendant Navy Federal Credit Union. The case is filed in federal court as Case No. 3:23-cv-01851.
Can I still file a claim?
No. The claim deadline was December 18, 2025. Members who missed this deadline cannot participate in the settlement or receive payments.
When will payments be distributed?
Payments will be distributed approximately 30 days after the final approval hearing on February 4, 2026, assuming the court grants approval and any appeals are resolved.
What legal standard applies to EFTA claims?
The Electronic Funds Transfer Act requires financial institutions to investigate unauthorized transaction claims, provide written explanations for denials, and produce supporting documents upon member request. Violations can result in statutory damages.
What could be the potential outcomes?
The most likely outcome is final settlement approval, resulting in payments to class members and policy changes at Navy Federal. If the settlement is rejected, the case could proceed to trial or renegotiation.
Where can I find more information?
Visit the official settlement website at StephensonEFTALitigation.com or contact the settlement administrator at 833-621-8312. Court documents are available through PACER for Case No. 3:23-cv-01851.
Last Updated: February 13, 2026
Disclaimer: This article provides general information about the Navy Federal EFTA class action settlement and does not constitute legal advice.
Need Help? Contact the settlement administrator at 833-621-8312 or visit StephensonEFTALitigation.com for claim assistance.
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About the Author
Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
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