Florida-based VyStar Credit Union has faced a $1.5 million penalty due to a poorly executed launch of a new online banking system, which left members unable to access their accounts and funds.
The Consumer Financial Protection Bureau (CFPB) has directed VyStar to pay the civil penalty to its victims relief fund. Additionally, the credit union is required to compensate all members who incurred fees and costs as a result of the issues.
In 2022, VyStar, which has over 980,000 members, attempted to implement a new online banking platform, anticipating a brief period of service unavailability. However, the system crashed upon launch because the CFPB reported that VyStar initiated it prematurely and did not follow essential processes to ensure its success.
After being taken offline shortly after the initial launch, the platform was relaunched but lacked essential banking services, with some features not restored for months. This situation prevented members from managing their accounts, led to late fees for failed online bill payments, and, in many cases, restricted access to funds.
“VyStar and its senior management mishandled the roll-out of a new banking system, leaving customers without online access to their accounts,” stated CFPB director Rohit Chopra. “The careless errors made by VyStar caused financial harm to their members.”
Todd Harper, chairman of the National Credit Union Administration, remarked: “Credit unions must prioritize their members, yet VyStar’s due diligence was inadequate for successfully converting its mobile and online banking platforms. These management failures resulted in consumer harm lasting not just weeks, but months, as well as raised various risks including strategic, reputational, legal, and compliance issues.”