A spokesman said they had decided the next best course of action to get justice for the 19-year-old was to begin legal action against the office of the US President and the woman who fled the UK in the aftermath of the accident.
ITV News understands the family is suing the administration for "lawless misconduct" over its involvement granting diplomatic immunity for Ms Sacoolas.
Now the Dunn family is to bring legal action against her in the United States for civil damages and the administration for failing to follow international precedent over who is covered by the rules of diplomatic immunity.
Harry's family have already said they plan to take legal action against the Foreign Office and are seeking an investigation into the police.
Radd Seiger, the Dunn family spokesperson, told ITV News: "The family did not want any of this. They simply wanted the police and authorities on both sides of the Atlantic to do the right thing for them and ensure justice was done.
"That is what any of us would have expected had this happened to us. However, that is not what happened and it is now clear that the various agencies involved not only did not do what they were supposed to do, but have in fact become part of the problem."
He said the family are the only ones who have "behaved with dignity and grace."
"As demonstrated by the disgusting stunt that President Trump and Robert O’Brien tried to pull in the Oval Office exactly two weeks ago today, when the family were lured to the White House under a pretense only to be ambushed by the Administration who tried to engineer a grotesque meeting between Mrs Sacoolas and Harry’s parents," Mr Seiger added.
And, Harry's stepsister, Larna Harber, said the family remained "devastated" by the death months on.
She said they expected to be some closure following Harry's funeral "but how wrong were we".
She said: "We haven't been able to grieve for Harry because of all of the other stuff that's come to light.
"One of the things that was promised to Harry on the night of his passing was to get justice."
Ms Harber said the family was back in the US to continue to fight for justice and to put pressure on the authorities to ensure "they do the right thing" and send Ms Sacoolas back to the UK.
"There's so many unanswered questions that only she can answer; did she go over and comfort Harry?," she said.
"He was laid on the verge for almost 50 minutes before an ambulance got to him. Did she go over and comfort him?
"We don't know, we know nothing."
She said they needed these answers before they could grieve.
Ms Harber said they had heard nothing from the President since the meeting.
And she said they had a strong feeling they had been misled and lied to about certain aspects of the investigation.
"There are so many discrepancies; why would you lie to us as a family - we're going through hard enough time as it is trying to grieve for Harry without having to fight for justice."
At the White House meeting, President Trump told Charlotte Charles, Harry's mum, he would try to push the matter from another angle.
But Mr Seiger said the family have had no further contact from Mr Trump and now "have no faith in his words."
"Sadly, the only option available to them now is legal proceedings," he added.
"The Trump administration have tried to twist and contort the laws on diplomatic immunity to argue that Mrs Sacoolas should be permitted to skip the UK after her actions and escape justice.
"That is not how it works and the family will not stand for it. They intend to take their case to Federal Court and expose the Trump administration's actions here for what they are, a wanton and total disregard for the law."
The family had earlier revealed it was their intention to refer Northamptonshire Police to the Independent Office for Police Conduct for its action during the crash investigation.
Lawyers have begun the process of drafting letters; one called a “letter of claim”, which is a prelude to a judicial review, about the advice given to Northamptonshire Police by the Foreign Office, and the other to request an investigation by the IOPC into the conduct of the force.