On October 31, the CFPB entered into a consent order with a Florida-chartered credit union for harming consumers in connection with the botched launch of a new online banking system, in violation of the Consumer Financial Protection Act (CFPA). 

In May 2022, the credit union, which is one of the largest in the country, attempted to launch a new online platform. According to the Bureau, shortly after it launched, the platform became unstable, intermittently losing functionality. The credit union re-launched a limited version that did not provide members access to their account statement or history, the ability to make internal transfers between accounts, or credit card and loan payment functions, including recurring payments. Customers that sought help by calling customer support or visiting a local branch faced long wait times or limited service. As a result, customers incurred NSF and overdraft fees, late fees, and other related charges.

The CFPB determined that the credit union committed unfair acts and practices in violation of the CFPA by:

• Denying Consumers Access to their Money and Accounts. The credit union allegedly disregarded red flags and proceeded with a rollout that prevented consumers from accessing their accounts and funds. The platform’s frequent outages and limited functionality led to financial losses and other consumer harm.
• Launching a New Platform Prematurely without Adequate Testing. The credit union pushed the platform live in order to meet an unrealistic deadline, ignoring warnings from its development team. These alleged management and oversight failures resulted in prolonged outages and limited functionality of the online banking platform.

The CFPB’s order requires the credit union to refund fees charged to members and reimburse any third-party costs imposed on members as a result of the outage, including interest. In addition, the Bureau levied a $1.5 million civil penalty against the credit union.

Putting it into Practice: The action was the result of the CFPB’s collaboration with the National Credit Union Administration (NCUA), which also issued a statement addressing the action. Notably, it is one of the few Bureau enforcement actions against a financial institution for problems related to the planned rollout of a new financial product or service. The Bureau’s action underscores the importance of thorough testing and clear communication to avoid confusion or negative impacts on consumers.

Listen to this post