Podcast - The CFPB Takes Action Against VyStar Credit Union

Welcome to another podcast of Clearly Conspicuous. As we've noted in previous sessions, our goals in this podcast is to make you succeed in this current environment, make you aware of what's going on with the federal and state consumer protection agencies and give you practical tips for success. It's a privilege to be with you today.

The CFPB Takes Action Against VyStar After Failed Online Platform Rollout

Today we discuss action by the CFPB ordering VyStar Credit Union to pay $1.5 million for illegally stranding consumers from accessing their money and accounts. On October 31, the Consumer Financial Protection Bureau took action against VyStar Credit Union for allegedly harming consumers through its botched rollout of a new online banking system. In May of 2022, VyStar transitioned to a new online banking platform that made it difficult for credit union members to perform basic banking functions for weeks, with some features unavailable for more than six months. Consumers incurred fees and costs as a result of these problems. The CFPB is ordering VyStar to ensure that all consumers are made whole. VyStar must also pay a $1.5 million civil penalty to the CFPB's Victims Relief Fund. As quoted by Director Chopra, "VyStar and its senior management bungled the credit union's rollout of a new banking system and left consumers stranded without online access to their accounts. VyStar's careless errors inflicted financial harm on their credit union members."

VyStar, formerly known as JAX Navy Federal Credit Union, is a Florida state-chartered credit union headquartered in Jacksonville with 70 branches in Florida and 10 branches in Georgia. VyStar is one of the largest credit unions in the country, with approximately $14.75 billion in total assets and over 980,000 members. In May of 2022, VyStar attempted to launch a new virtual banking platform. VyStar anticipated banking services would be inaccessible for several days during the transition to the new platform, but it turned out to be much, much longer. The new system crashed upon launch because VyStar brought it online prematurely and failed to establish or follow critical processes to ensure its success. The platform was taken offline soon after launch. Upon bringing the system back online, the new platform lacked key banking services, some of which were not restored for months.

The CFPB found that the outage and subsequent limited functionality of the new banking platform harmed VyStar’s members in a significant way. Affected consumers were unable to manage their accounts or charged late fees when their online bill payments did not go through and were in many cases unable to access their funds. The CFPB be found VyStar violated the Consumer Financial Protection Act specifically through depriving consumers' access to money and accounts, VyStar ignored red flags and continued with the rollout, causing consumers to lose access to their accounts and funds, as well as 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.

Concluding Thoughts

So here's the conclusion and the key takeaway. Under the Consumer Financial Protection Act, the CFPB has the authority to take action against credit unions with over $10 billion in assets that violate consumer financial protection laws. The CFPB works with partners in their efforts to investigate, and here the CFPB worked with the National Credit Union Administration in its investigation of VyStar’s activity. So please stay tuned for further programs as we identify and address the key issues and developments. And I wish you continued success and a meaningful day. Thank you.