Adding insult to injury, the Consumer Financial Protection Bureau yesterday fined one of the nation’s largest credit unions $1.5 million because the rollout of a new banking platform back in 2022 did not go according to plan and left some customers unable to access their accounts or perform certain functions online.
Why it matters: The action against VyStar Credit Union underscores the CFPB’s growing focus on the digital capabilities of financial institutions and their impact on consumers. As credit unions and banks continue to modernize their services, regulators are keenly watching for potential disruptions that can cause significant financial harm.
Driving the news: The CFPB and National Credit Union Administration (NCUA) worked together to investigate VyStar’s failed launch of its new online and mobile banking system in May 2022. The rollout was expected to lead to a brief service interruption, but turned into a months-long ordeal for VyStar’s 980,000 members.
- VyStar’s initial plan was to switch from the old platform to the new one with only a few days of service disruption. However, the new platform quickly crashed after launch, and members were left struggling with intermittent outages and limited functionality for weeks. Full service wasn’t restored until December 2022, nearly seven months after the failed rollout.
- During the extended outage, customers reported long wait times for support, both online and in physical branches. The credit union’s call center saw a 250% surge in call volume, and many calls went unanswered. At one point, members faced virtual waiting rooms with thousands of others, with some waiting hours to access their accounts.
Between the lines: The CFPB found that VyStar’s mistakes were avoidable. The credit union’s senior management made several decisions that directly contributed to the issues experienced by members, including launching the platform before it was ready and ignoring warnings from its development team. VyStar chose an inexperienced vendor, rushed the implementation, and failed to establish critical testing and governance protocols to ensure a successful rollout.
- VyStar executives downgraded more than 100 critical platform defects just before the launch, effectively disregarding warnings from its own quality assurance team. The head of VyStar’s Quality Assurance refused to sign off on the launch, but management pushed forward regardless.
The bottom line: The CFPB’s order requires VyStar to refund fees incurred by members during the outage and overhaul its processes for future technology upgrades to avoid repeating the same mistakes. VyStar must also pay $1.5 million to the CFPB’s victims relief fund as part of the settlement.
