diff --git a/packages/favorites/src/lib/Favorites.test.tsx b/packages/favorites/src/lib/Favorites.test.tsx
index b0ccfc488..5b3b7b2f3 100644
--- a/packages/favorites/src/lib/Favorites.test.tsx
+++ b/packages/favorites/src/lib/Favorites.test.tsx
@@ -3,6 +3,7 @@ import { render, waitFor, fireEvent, act } from '@testing-library/react';
 import userEvent from '@testing-library/user-event';
 // eslint-disable-next-line @nx/enforce-module-boundaries
 import { server } from '@availity/mock/src/lib/server';
+import { http, HttpResponse } from 'msw';
 import avMessages from '@availity/message-core';
 import { FavoritesProvider } from './Favorites';
 import { FavoriteHeart } from './FavoriteHeart';
@@ -15,8 +16,9 @@ const domain = () => {
   }
 
   if (window.location.hostname) {
-    return `${window.location.protocol}//${window.location.hostname}${window.location.port ? `:${window.location.port}` : ''
-      }`;
+    return `${window.location.protocol}//${window.location.hostname}${
+      window.location.port ? `:${window.location.port}` : ''
+    }`;
   }
 
   return '*';
@@ -274,5 +276,81 @@ describe('Favorites', () => {
     });
   });
 
+  // The Settings API PUT responds with the saved settings object ({ favorites: [...] }),
+  // NOT wrapped in `settings: []` like the GET list response. These tests use a fixed
+  // response (not an echo of the request) so the mock cannot hide a response-shape mismatch.
+  describe('Settings PUT response shape', () => {
+    it('should add favorite when PUT responds with an unwrapped { favorites } body', async () => {
+      server.use(
+        http.put('/api/utils/v1/settings', () =>
+          HttpResponse.json(
+            {
+              favorites: [
+                { id: '123', pos: 0 },
+                { id: '456', pos: 1 },
+                { id: '789', pos: 2 },
+              ],
+            },
+            { status: 200 }
+          )
+        )
+      );
+      const user = userEvent.setup();
+
+      const { container } = render(
+        <QueryClientProvider client={queryClient}>
+          <FavoritesProvider>
+            <FavoriteHeart id="789" name="App #3" />
+          </FavoritesProvider>
+        </QueryClientProvider>
+      );
+
+      const heart = container.querySelector('#av-favorite-heart-789');
+
+      await waitFor(() => expect(heart).not.toBeChecked());
+
+      if (heart) await user.click(heart);
+
+      await waitFor(() => expect(heart).toBeChecked());
 
+      expect(avMessages.send).toHaveBeenCalledWith({
+        event: 'av:favorites:update',
+        favorites: [
+          { id: '123', pos: 0 },
+          { id: '456', pos: 1 },
+          { id: '789', pos: 2 },
+        ],
+      });
+    });
+
+    it('should remove favorite when PUT responds with an unwrapped { favorites } body', async () => {
+      server.use(
+        http.put('/api/utils/v1/settings', () =>
+          HttpResponse.json({ favorites: [{ id: '456', pos: 1 }] }, { status: 200 })
+        )
+      );
+      const user = userEvent.setup();
+
+      const { container } = render(
+        <QueryClientProvider client={queryClient}>
+          <FavoritesProvider>
+            <FavoriteHeart id="123" name="App #1" />
+          </FavoritesProvider>
+        </QueryClientProvider>
+      );
+
+      const heart = container.querySelector('#av-favorite-heart-123');
+
+      await waitFor(() => expect(heart).toBeChecked());
+
+      if (heart) await user.click(heart);
+
+      await waitFor(() => expect(heart).not.toBeChecked());
+
+      expect(avMessages.send).toHaveBeenCalledWith({
+        event: 'av:favorites:update',
+        favorites: [{ id: '456', pos: 1 }],
+      });
+    });
+  });
 });
diff --git a/packages/favorites/src/lib/utils.ts b/packages/favorites/src/lib/utils.ts
index 8b7729a87..1fb39b0ab 100644
--- a/packages/favorites/src/lib/utils.ts
+++ b/packages/favorites/src/lib/utils.ts
@@ -13,31 +13,38 @@ export const isFavorite = (arg: Favorite) => Boolean(typeof arg?.id === 'string'
 export const validateFavorites = (unvalidatedFavorites: Favorite[]) => {
   const validatedFavorites = Array.isArray(unvalidatedFavorites) ? unvalidatedFavorites?.filter(isFavorite) : [];
   return validatedFavorites;
-}
+};
 
 type MutationVariables = {
   favorites: Favorite[];
   targetFavoriteId: string;
-}
+};
 
-interface FavoritesSettings {
+/** Settings API GET response: the saved settings are wrapped in a `settings` list. */
+interface FavoritesGetResponse {
   settings: { favorites: Favorite[] }[];
 }
 
-const submit = async ({ favorites, targetFavoriteId }: MutationVariables, applicationId: string) => {
-  const response = await avSettingsApi.setApplication<FavoritesSettings>(applicationId, { favorites });
-  return { favorites: response.data.settings[0].favorites, targetFavoriteId };
+/** Settings API PUT response: the saved settings object is returned directly, NOT wrapped in `settings`. */
+interface FavoritesPutResponse {
+  favorites: Favorite[];
 }
 
+const submit = async ({ favorites, targetFavoriteId }: MutationVariables, applicationId: string) => {
+  const response = await avSettingsApi.setApplication<FavoritesPutResponse>(applicationId, { favorites });
+  return { favorites: response.data.favorites, targetFavoriteId };
+};
+
 const getFavorites = async (applicationId: string) => {
-  const result = await avSettingsApi.getApplication<FavoritesSettings>(applicationId);
+  const result = await avSettingsApi.getApplication<FavoritesGetResponse>(applicationId);
   const unvalidatedFavorites = result?.data?.settings?.[0]?.favorites;
   const validatedFavorites = validateFavorites(unvalidatedFavorites);
 
   return validatedFavorites;
 };
 
-export const useFavoritesQuery = (enabled: boolean, applicationId: string): UseQueryResult<Favorite[], Error> => useQuery({ queryKey: ['favorites'], queryFn: () => getFavorites(applicationId), enabled });
+export const useFavoritesQuery = (enabled: boolean, applicationId: string): UseQueryResult<Favorite[], Error> =>
+  useQuery({ queryKey: ['favorites'], queryFn: () => getFavorites(applicationId), enabled });
 
 type MutationOptions = {
   onMutationStart?: (targetFavoriteId: string) => void;
@@ -46,13 +53,14 @@ type MutationOptions = {
 export const useSubmitFavorites = ({ onMutationStart }: MutationOptions, applicationId: string) => {
   const queryClient = useQueryClient();
   const { mutateAsync: submitFavorites, ...rest } = useMutation({
-    mutationFn: ({ favorites, targetFavoriteId }: MutationVariables) => submit({ favorites, targetFavoriteId }, applicationId),
+    mutationFn: ({ favorites, targetFavoriteId }: MutationVariables) =>
+      submit({ favorites, targetFavoriteId }, applicationId),
     onMutate(variables) {
       onMutationStart?.(variables.targetFavoriteId);
     },
     onSuccess(data) {
       queryClient.setQueryData(['favorites'], data.favorites);
-    }
+    },
   });
   return { submitFavorites, ...rest };
 };
diff --git a/packages/mock/src/lib/handlers.ts b/packages/mock/src/lib/handlers.ts
index b40d06f0a..a8074969b 100644
--- a/packages/mock/src/lib/handlers.ts
+++ b/packages/mock/src/lib/handlers.ts
@@ -96,7 +96,8 @@ export const handlers = [
     if (params.applicationId === 'Gateway-AvNavigation') {
       await delay(defaultDelay);
       return HttpResponse.json(settings, { status: 200 });
-    } if (params.applicationId === 'AVATAR') {
+    }
+    if (params.applicationId === 'AVATAR') {
       await delay(defaultDelay);
       return HttpResponse.json(avatarSettings, { status: 200 });
     }
@@ -105,7 +106,8 @@ export const handlers = [
     const body = await context.request.json();
 
     await delay(defaultDelay);
-    return HttpResponse.json({ settings: [body] }, { status: 201 });
+    // The real Settings API PUT returns the saved settings object directly (not wrapped in `settings`)
+    return HttpResponse.json(body, { status: 201 });
   }),
 
   // Codes
@@ -365,42 +367,41 @@ export const handlers = [
     };
 
     if (password) {
-      return password === "1234" ?
-      new HttpResponse(null, {
-        status: 200,
-        headers: {
-          'av-scan-bytes': fileSize,
-          'av-scan-result': 'accepted',
-          'cache-control': 'no-store',
-          'decryption-result': 'accepted',
-          references: `["approved/${params.bucket}/${params.location}"]`,
-          's3-references': `["s3://path-to-vault/approved/${params.bucket}/${params.location}"]`,
-          'transfer-encoding': 'chunked',
-          'tus-resumable': '1.0.0',
-          'upload-length': fileSize,
-          'upload-metadata': metadata,
-          'upload-offset': fileSize,
-          'upload-result': 'accepted',
-        },
-      })
-      :
-      new HttpResponse(null, {
-        status: 200,
-        headers: {
-          'av-scan-bytes': fileSize,
-          'av-scan-result': 'accepted',
-          'cache-control': 'no-store',
-          'decryption-result': 'rejected',
-          references: `["approved/${params.bucket}/${params.location}"]`,
-          's3-references': `["s3://path-to-vault/approved/${params.bucket}/${params.location}"]`,
-          'transfer-encoding': 'chunked',
-          'tus-resumable': '1.0.0',
-          'upload-length': fileSize,
-          'upload-metadata': metadata,
-          'upload-offset': fileSize,
-          'upload-result': 'encrypted',
-        },
-      });
+      return password === '1234'
+        ? new HttpResponse(null, {
+            status: 200,
+            headers: {
+              'av-scan-bytes': fileSize,
+              'av-scan-result': 'accepted',
+              'cache-control': 'no-store',
+              'decryption-result': 'accepted',
+              references: `["approved/${params.bucket}/${params.location}"]`,
+              's3-references': `["s3://path-to-vault/approved/${params.bucket}/${params.location}"]`,
+              'transfer-encoding': 'chunked',
+              'tus-resumable': '1.0.0',
+              'upload-length': fileSize,
+              'upload-metadata': metadata,
+              'upload-offset': fileSize,
+              'upload-result': 'accepted',
+            },
+          })
+        : new HttpResponse(null, {
+            status: 200,
+            headers: {
+              'av-scan-bytes': fileSize,
+              'av-scan-result': 'accepted',
+              'cache-control': 'no-store',
+              'decryption-result': 'rejected',
+              references: `["approved/${params.bucket}/${params.location}"]`,
+              's3-references': `["s3://path-to-vault/approved/${params.bucket}/${params.location}"]`,
+              'transfer-encoding': 'chunked',
+              'tus-resumable': '1.0.0',
+              'upload-length': fileSize,
+              'upload-metadata': metadata,
+              'upload-offset': fileSize,
+              'upload-result': 'encrypted',
+            },
+          });
     }
 
     await delay(1000);