On May 7, 2024, the Consumer Financial Protection Bureau (CFPB) announced that it had entered into a consent order with a financial technology company, resolving allegations that the company committed unfair acts or practices in violation of the Consumer Financial Protection Act (CFPA), by failing to provide consumers who closed their accounts with timely refunds.
The company, which partners with banks to offer financial products, is responsible for processing account payments and for most consumer communications. Once a consumer’s checking or savings account is closed, it is also responsible for returning funds to consumers by check within 14 days in accordance with the company’s policy. The CFPB alleged that failures to provide timely refunds, sometimes delayed by more than 90 days from the closure of an account, caused or were likely to cause substantial injury in the form of lost use of funds.
Under the terms of the consent order, the company agreed to reserve or deposit $1.3 million into a segregated deposit account for the purpose of providing redress to affected consumers. The company also agreed to pay a civil money penalty of $3.25 million into the CFPB’s victims relief fund.
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