The Consumer Financial Protection Bureau (CFPB) has taken action against VyStar Credit Union and ordered the company to pay USD 1.5 million for impairing consumers via its rollout of a new online banking system. The decision to impose the USD 1.5 million fine on VyStar Credit Union comes after the company stranded consumers from accessing their funds and accounts.

Besides ordering the company to ensure that all consumers are made whole, the CFPB demands that VyStar pay the civil penalty to its victims' relief fund. The current move comes from the CFPB’s close collaboration with the National Credit Union Administration (NCUA). The regulator revealed that VyStar violated the Consumer Financial Protection Act by depriving consumers of access to money and accounts, as well as rushing a new platform without appropriate testing.

VyStar’s dysfunctional online banking platform According to the CFPB’s official press release, back in May 2022, VyStar transitioned its operations to a new, yet dysfunctional online banking platform that posed several difficulties for credit union members to conduct basic banking functionalities for weeks. In addition to that, some features were not available for over six months. This led to families incurring fees and costs, thus negatively impacting their lives and financial situation.

The platform was then taken offline after the launch, yet, after bringing the system back online, the new platform lacked critical banking services. Representatives from the CFPB mentioned that VyStar’s actions and errors inflicted financial harm on their credit union members. The CFPB, together with the NCUA, collaborated to contain the consequences of VyStar’s misconduct.

Moreover, the CFPB underlined that credit unions must prioritise their members, however, VyStar’s due diligence did not meet the guidelines for completing a conversion of the credit union’s mobile and online banking platforms. Besides harming consumers over the course of months, these management failures led to safety and soundness issues such as reputational, strategic, legal, and compliance risks. Now, the CFPB orders VyStar to refund all fees to affected consumers, clean up its dysfunctional procedure for updating its systems, and pay the USD 1.5 million civil penalty.

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