CFPB fines VyStar Credit Union $1.5m over “botched rollout” of online banking system
The Consumer Financial Protection Bureau (CFPB) has taken action against Florida’s VyStar Credit Union for allegedly “harming consumers through its botched rollout of a new online banking system”.
VyStar signed for new mobile and online banking software from domestic vendor Nymbus in 2021. The credit union is also an investor in Nymbus.
The CFPB says it worked with the NCUA in its investigation
In a statement published on Thursday, the CFPB says: “In May 2022, VyStar transitioned to a new, dysfunctional online banking platform that made it difficult for credit union members to perform basic banking functions for weeks, with some features unavailable for more than six months. Families incurred fees and costs as a result of these problems.”
The regulator claims VyStar “plowed forward to complete the platform conversion process ahead of an unrealistic deadline, despite warnings from its own development team”.
CFPB Director Rohit Chopra says: “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.”
The CFPB says it worked with the National Credit Union Administration (NCUA) in its investigation. In a statement on the action, NCUA Chairman Todd Harper says: “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,” Harper adds.
The CFPB says VyStar “must ensure that the fees charged to its members as a result of the outage have been refunded, and reimburse any outstanding third-party fees or costs, including interest costs, imposed on members as a result of the outage”.
The credit union has also been ordered to pay a $1.5 million civil money penalty to the CFPB’s victims relief fund.
In addition, the regulator says: “For future updates to its banking systems, VyStar must create contingency plans to minimise the impact on consumers’ ability to use its banking platform. The plans must include sufficient customer service resources to address consumer problems, and ensure upgrades and maintenance for consumer-facing banking systems are performed in a timely manner.”
Headquartered in Jacksonville, Florida, VyStar operates 70 branches within the state and 10 in Georgia. With over 980,000 members and total assets of $14.75 billion, it is one of the largest credit unions in the US.
