CFPB fines VyStar Credit Union $1.5m for botched banking system update

VyStar Credit Union has been fined $1.5m by the CFPB following a problematic rollout of its online banking system, which impacted member access and financial operations.

According to Finextra, the penalty will contribute to the CFPB’s victims relief fund, addressing the disruption that left members without crucial banking services, incurring fees and costs due to the migration issues.

In 2022, VyStar attempted a major update to its digital banking platform, aiming for a brief service downtime. However, the launch was premature, and the platform crashed due to inadequate oversight and failure to adhere to essential processes for a successful deployment. This failure not only resulted in the platform being taken offline shortly after its launch but also in the prolonged absence of key banking features—some members faced months without vital online services.

The CFPB has mandated VyStar to rectify the situation by compensating all affected members. CFPB Director Rohit Chopra commented on the oversight, stating, “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. VyStar’s careless errors inflicted financial harm on their credit union members.” Additionally, Todd Harper, chairman of the National Credit Union Administration, criticised the credit union for not prioritising member needs and highlighted the extensive consumer harm and broader risks to safety and soundness caused by these management failures.

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