On August 10, 2022, the Consumer Financial Protection Bureau (CFPB) announced that it entered into a consent order with a California Fintech company for allegedly engaging in deceptive acts and practices in violation of the Consumer Financial Protection Act.
According to the CFPB, the company offered an automatic savings tool to customers through which customers would grant the company access to their checking accounts so that the company could analyze the information in those accounts, determine the amount each customer should be saving, and facilitate transfers from the customers’ checking accounts to savings accounts held in the company’s name at third-party institutions. The company allegedly advertised that the service came with a “no overdraft guarantee,” however, the CFPB alleged that limitations in the automatic savings algorithm allegedly caused overdrafts and overdraft penalties for customers, many of whom were not reimbursed for those fees. Additionally, the company allegedly misrepresented that it would not earn interest on customers’ savings accounts when this was not in fact the case.
Under the consent order, the company agreed to pay $68,145 in consumer redress as well as a $2.7 civil money penalty.
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