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CFPB levies $1.5M civil money penalty against a credit union
On October 31, the CFPB issued a consent order and stipulation against a federal credit union for allegedly engaging in unfair practices related to its online and mobile banking services, which violated the CFPA. The Bureau found that the credit union’s premature launch of a new banking platform led to service disruptions and harm to consumers. In May 2022, the credit union introduced a new banking platform, but the platform crashed upon launch and was subsequently taken offline. The Bureau alleged these disruptions caused significant harm to the credit union’s members, such as its failure to assess consumer fees properly for timely payments, and restricted access to consumer funds. The order mandated the credit union to comply with the law, refund fees to affected consumers, and pay a $1.5 million civil money penalty.
The CFPB stated the credit union’s actions resulted in substantial injury to consumers, including fees and costs due to missed payments and restricted access to funds. The credit union allegedly failed to establish adequate management and governance processes, ignored red flags, and rushed the project timeline. The order required the credit union to make a contingency plan, conduct a refund audit, and reimburse all affected consumers for previously uncompensated fees and costs.
Despite consenting to the issuance of the order, the credit union neither admitted nor denied any wrongdoing. The CFPB emphasized that the credit union’s failure to provide a stable banking platform constituted an unfair practice under the CFPA. The order included provisions for compliance monitoring and reporting to ensure the credit union adheres to the corrective actions mandated by the Bureau.