CFPB Takes Action Against VyStar for ‘Botched’ Online Banking System Rollout
The CFPB orders VyStar to pay $1.5 million and refund member fees during a system outage in 2022.
The CFPB ordered the Jacksonville, Fla.-based VyStar Credit Union ($14.7 billion in assets, 997,469 members) to pay a $1.5 million civil penalty for the credit union’s failed online banking system rollout in 2022.
On May 13, 2022 VyStar attempted to switch over to a new online and mobile banking platform. The brief outage, as explained to members, was planned to last for two days. The outage lasted for more than a week and systems were still not fully functional a month later. At the time, members were furious and posted tens-of-thousands of complaints on the credit union’s Facebook page.
Thursday’s action by the CFPB called VyStar’s rollout “botched” and “dysfunctional.”
“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 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. 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.
- Pay a $1.5 million fine: VyStar will pay a $1.5 million civil penalty to the CFPB’s victims relief fund.
The NCUA Board has issued statements from two of the three members rebuking VyStar.
NCUA Board Chairman Todd Harper said, “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.”
CU Times Senior Reporter Peter Strozniak will have a full story coming soon with statements from VyStar, the NCUA and details of the action taken against the credit union.