The Consumer Financial Protection Bureau (CFPB) fined VyStar Credit Union for its botched rollout of a new online banking system.
In May 2022, VyStar transitioned to a new online banking platform that made it difficult for credit union members to perform basic banking functions for weeks. Some features were unavailable for more than six months. As a result, customers incurred fees and costs as a result of these problems.
“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,” CFPB Director Rohit Chopra said. “VyStar’s careless errors inflicted financial harm on their credit union members.”
The action stems from the CFPB’s partnership with the National Credit Union Administration (NCUA).
“Credit unions must prioritize 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,” NCUA Chairman Todd Harper said. “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.”
The new online system crashed upon launch because VyStar brought it online prematurely and failed to establish or follow processes, CFPB officials said. The platform was taken offline soon after launch, but after bringing the system back online, the new platform lacked key banking services, some of which were not restored for months.
The CFPB found that VyStar violated the Consumer Financial Protection Act by:
• Depriving consumers access to money and accounts: VyStar ignored red flags and continued with the rollout that caused consumers to lose access to their accounts and funds. The new, dysfunctional platform’s frequent outages and limited functionality led to financial losses and other harm to consumers.
• Rushing a new platform online without appropriate testing: VyStar plowed forward to complete the platform conversion process ahead of an unrealistic deadline, despite warnings from its own development team. VyStar’s management and governance failures resulted in the virtual banking platform outage and sustained period of limited functionality.
The CFPB’s order requires VyStar to:
• Refund fees to affected consumers: 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.
• Clean up its broken process for updating its systems: For future updates to its banking systems, VyStar must create contingency plans to minimize the impact on consumers’ ability to use its banking platform.
• Pay a $1.5 million civil penalty to the CFPB’s victims relief fund.
VyStar, formerly known as JAX Navy Federal Credit Union, is based in Jacksonville with 70 branches in Florida and 10 branches in Georgia. VyStar has approximately $14.75 billion in total assets and over 980,000 members.