By KIMBERLEY HAAS
A multistate settlement has been reached after a testing error led to the unauthorized withdrawal of $2.3 billion from the accounts of nearly 480,000 mortgage holders serviced by Mr. Cooper.
ACI Payments, a processor for a variety of third-party clients, erroneously initiated the electronic withdrawals in April of 2021, causing consumers stress nationwide. So state banking officials from 44 states and 50 state attorney generals joined together to take action against ACI Worldwide, levying a total of $20 million in fines.
In addition to paying the states, the settlement announced on Tuesday requires ACI to use artificially created data instead of real customer data when testing systems or software. Testing, development, and quality insurance work will now be segregated from consumer systems.
Officials in Connecticut said in a press release that 7,136 consumers were impacted there.
“Any financial institution with access to billions of dollars needs robust and redundant security measures. ACI’s unauthorized withdrawals resulted in massive chaos and confusion, exposing consumers to overdraft fees. Connecticut helped to lead this major multistate investigation and settlement, forcing significant penalties and strong security measures going forward to ensure this error is never repeated,” Attorney General William Tong said in a statement.
Connecticut will receive $558,740 from the settlement, which includes a $220,000 additional payment due to its leadership role in the multistate action.
According to officials at the attorney general’s office in Virginia, Mr. Cooper customers were offered ACI’s Speedpay product so they could schedule and electronically pay their monthly mortgage payments through an Automated Clearing House system.
The Speedpay platform was being tested when customer data was submitted into the ACH system, resulting in ACI erroneously attempting to withdraw payments.
Virginia will receive $247,019 from the settlement, according to a press release.
“ACI’s testing error was unacceptable and wildly inconvenienced hundreds of thousands of American consumers. Approximately 14,629 Virginians were affected by these unauthorized mortgage payments, resulting in unnecessary headaches and stress. Today’s settlement goes towards making sure this problem never repeats itself,” Attorney General Jason Miyares said in a statement.
In New Jersey, 17,579 mortgage holders had withdrawals initiated with only one individual having funds removed from their account, but 82 consumers were affected by fees due to the withdrawal attempt, according to a press release.
“Consumers need to know that if they use and rely on electronic bill payment services, they will not be harmed financially by faulty automated clearinghouse withdrawals from their bank accounts, leaving them short. Companies operating in this space have a duty to provide robust risk management to prevent this sort of mistake in the first place,” Attorney General Matthew Platkin said in a statement.
Impacted consumers have received direct compensation from a separate class action settlement. Additionally, the Consumer Financial Protection Bureau required leaders at ACI to commit to consumer safeguards and penalized the company $25 million.
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