Online Banking
In re VyStar Credit Union
Date: October 31, 2024
Issue: VyStar Credit Union’s consent order with the Consumer Financial Protection Bureau (CFPB) to resolve allegations claiming its botched rollout of its online banking platform caused customers to lose access to their accounts.
Case Summary: VyStar Credit Union agreed to pay $1.5 million to resolve the CFPB’s allegations that the botched rollout of its online banking platform caused customers to lose access to their accounts.
In May 2022, VyStar attempted to launch a new virtual banking platform that would disable the older platform and replace it with systems designed by their vendor. VyStar originally envisioned that their platform would only have a brief interruption of services from May 13 to May 15, 2022, as they transitioned to the new platform. But according to the CFPB, members could not log into their accounts, forcing the platform to be taken offline from May 17 to May 22, 2022. From May 23 to December 2022, members allegedly had to use a limited version of the platform lacking previously used features, such as access to account statements, making internal transfers, credit card and loan payments, setting up recurring payments, and accessing full transaction histories. The mobile application was also allegedly unavailable for a month after the initial failure and had to slowly reintroduce basic banking features.
In addition, the bureau pointed to inconveniences suffered by consumers which were allegedly compounded by Vystar’s response effort. According to the CFPB, virtual waiting rooms were created to maintain stability in the limited version, forcing customers to wait in queues, potentially for hours. CFPB also alleged that phone calls to VyStar’s call center could not meet their consumer’s needs with a 250% increase in calls and a high drop rate of 31% to 44% for months. Consumers going to physical branches of the bank also experienced long waiting times. Thus, the CFPB claimed that without the abilities of the precursor platform, consumers could not fully perform their banking needs.
The CFPB also claimed that the faulty online banking rollout greatly diminished consumers’ ability to effectively manage their finances. With members less able to access account balances, transfer funds, and make payments on credit cards and loans, they were allegedly forced to take on unnecessary risks. These risks included delayed or deleted scheduled payments, incurring non-sufficient funds fees, overdraft fees, late fees, bounced check fees, interest payments for late charges and harm to credit reports.
In addition, the CFPB claimed the online banking platform’s collapse was caused by VyStar’s failure to establish reasonable management and governance processes and procedures. CFPB alleged that VyStar hired a vendor who was inexperienced in complex projects involving conversion from one platform to a new one and VyStar did not partake in standard risk management practices. The CFPB also alleged that VyStar did not adjust the timeline to launch the new platform, favoring speed and cost-cutting.
Bottom Line: VyStar did not admit to or deny the CFPB’s allegations.
Document: Consent Order
