diff --git a/app/src/main/kotlin/com/x8bit/bitwarden/ui/vault/feature/importlogins/ImportLoginsViewModel.kt b/app/src/main/kotlin/com/x8bit/bitwarden/ui/vault/feature/importlogins/ImportLoginsViewModel.kt
index f5202f107a..b1b5cd1507 100644
--- a/app/src/main/kotlin/com/x8bit/bitwarden/ui/vault/feature/importlogins/ImportLoginsViewModel.kt
+++ b/app/src/main/kotlin/com/x8bit/bitwarden/ui/vault/feature/importlogins/ImportLoginsViewModel.kt
@@ -85,9 +85,9 @@ class ImportLoginsViewModel @Inject constructor(
     }
 
     private fun handleFailedSyncAcknowledged() {
-        mutableStateFlow.update {
-            it.copy(dialogState = null)
-        }
+        dismissDialog()
+        firstTimeActionManager.storeShowImportLogins(showImportLogins = false)
+        firstTimeActionManager.storeShowImportLoginsSettingsBadge(showBadge = true)
         sendEvent(ImportLoginsEvent.NavigateBack)
     }
 
diff --git a/app/src/test/kotlin/com/x8bit/bitwarden/ui/vault/feature/importlogins/ImportLoginsViewModelTest.kt b/app/src/test/kotlin/com/x8bit/bitwarden/ui/vault/feature/importlogins/ImportLoginsViewModelTest.kt
index f9473fb0cd..fc529b2eb5 100644
--- a/app/src/test/kotlin/com/x8bit/bitwarden/ui/vault/feature/importlogins/ImportLoginsViewModelTest.kt
+++ b/app/src/test/kotlin/com/x8bit/bitwarden/ui/vault/feature/importlogins/ImportLoginsViewModelTest.kt
@@ -423,7 +423,7 @@ class ImportLoginsViewModelTest : BaseViewModelTest() {
     }
 
     @Test
-    fun `FailSyncAcknowledged should remove dialog state and send NavigateBack event`() =
+    fun `FailSyncAcknowledged clears dialog, navigates back, and stores first time values`() =
         runTest {
             coEvery {
                 vaultRepository.syncForResult(forced = true)
@@ -447,6 +447,10 @@ class ImportLoginsViewModelTest : BaseViewModelTest() {
                     awaitItem(),
                 )
             }
+            verify(exactly = 1) {
+                firstTimeActionManager.storeShowImportLogins(showImportLogins = false)
+                firstTimeActionManager.storeShowImportLoginsSettingsBadge(showBadge = true)
+            }
         }
 
     @Suppress("MaxLineLength")