The Consumer Financial Protection Bureau (CFPB) has fined VyStar Credit Union $1.5m for preventing consumers from accessing their funds and accounts.
The CFPB took action against VyStar Credit Union for consumer harm caused by a ‘botched’ rollout of its online banking system. In May 2022, the credit union launched a new platform that left members unable to perform basic banking tasks for weeks, with some features unavailable for over six months.
As a result of these issues, families faced additional fees and expenses. The CFPB is requiring VyStar to fully compensate affected consumers and has imposed a $1.5m civil penalty to be paid into its victims relief fund.
Rohit Chopra, Director of CFPB, commented: “VyStar and its senior management bungled the credit union’s rollout of a new banking system and left customers stranded without online access to their accounts. VyStar’s careless errors inflicted financial harm on their credit union members.”
The CFPB, working with the National Credit Union Administration (NCUA), has directed VyStar to take several steps. As aforementioned, VyStar must refund any fees members were charged because of the outage and pay a $1.5m penalty.
Additionally, it must set up plans to reduce disruptions during system updates, ensure enough customer support is available and complete system upgrades on time.
Todd Harper, Chairman of NCUA, stated: “Credit unions must prioritise their members, yet Vystar’s due diligence fell far short of what was required for completing a successful conversion of the credit union’s mobile and online banking platforms.
“These management failures resulted in consumer harm over the course of not just weeks but months, as well as safety and soundness problems like strategic, reputational, legal, and compliance risks.”
Earlier this year, the CFPB also took action against Chime Financial for failing to provide timely refunds to consumers when their accounts were closed. Some customers were left to cover bills with costly credit options due to these delays.
In response, the CFPB ordered Chime to pay at least $1.3m in restitution to affected customers and issued a $3.25m penalty to be added to the CFPB’s victims relief fund.
