The U.S. Consumer Financial Protection Bureau said Oct. 31 it found Jacksonville-based VyStar Credit Union violated the Consumer Financial Protection Act in what it described as a “botched rollout of a new online banking system” in May 2022.
The CFPB said in a news release VyStar’s transition “to a new, dysfunctional online banking platform” made it difficult for members to perform banking functions for weeks, with some features unavailable for more than six months.
“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 in the release.
“VyStar’s careless errors inflicted financial harm on their credit union members,” it said.
VyStar said in a news release it “has worked transparently with the CFPB and the National Credit Union Administration” and reached a mutual agreement with the consumer agency to resolve the matter.
The credit union said it took actions including reimbursing or waiving fees and pausing credit reporting.
“To be clear, VyStar proactively and voluntarily undertook this response, without regulatory prompt,” it said.
The penalties imposed by the CFPB included refund of fees for affected customers and a $1.5 million fine, which will be paid to the CFPB’s victims relief fund.
The CFPB said VyStar’s new online platform “crashed upon launch because VyStar brought it online prematurely and failed to establish or follow critical processes to ensure its success.”
VyStar said it has continued to make changes to its platform since the outages in 2022.
“We hope the continuous improvements to our online and mobile banking platforms reassures members that we are dedicated to being a responsive organization and emerging from this experience better and stronger,” CEO Brian Wolfburg said in VyStar’s release.
“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,” National Credit Union Administration Chairman Todd M. Harper said in the CFPB’s news release.
“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,” he said.
VyStar, founded in 1952 as the Jax Navy Federal Credit Union, is the 13th largest credit union in the U.S., according to a recent story by U.S. News & World Report.
It has about $14.75 billion in assets and 980,000 members, with 70 branches in Florida and 10 in Georgia, the CFPB said.