ACI Worldwide and one of its subsidiaries, ACI Payments, agreed to pay a $25 million civil penalty for illegally processing $2.3 billion in unauthorized mortgage payments from nearly 500,000 homeowners serviced by Mr. Cooper two years ago.
The Consumer Financial Protection Bureau (CFPB) issued a consent order against the company on Tuesday for improperly initiating the transactions in April 2021, which opened homeowners to overdraft and insufficient funds fees from their financial institutions.
In response, ACI said it consented to the order “without admitting any wrongdoing to avoid the expense and distraction of litigation.”
Meanwhile, Mr. Cooper said it’s “aligned with the agency’s approach to identifying our prior vendor’s mishandling of our customers’ critical information and taking appropriate actions as a preventative measure against similar future events.”
The case began in 2021 when the CFPB said it was looking into a situation with Mr. Cooper for making unauthorized withdrawals from borrower accounts during a weekend. Mr. Cooper soon pointed the finger at its vendor ACI Worldwide.
“The CFPB’s investigation found that ACI perpetrated the 2021 Mr. Cooper mortgage fiasco that impacted homeowners across the country,” CFPB director Rohit Chopra said in a statement. “While borrower accounts have now been fixed, we are penalizing ACI for its unlawful actions that created headaches for hundreds of thousands of borrowers.”
According to the CFPB, ACI conducted tests of its platform in April 2021, but instead of using deidentified or dummy data, it used actual consumer data from Mr. Cooper’s clients, such as names and bank account details. In total, ACI initiated around 1.4 million ACH withdrawals.
On Saturday, April 24, 2021, homeowners noticed inaccuracies in their account balances. For example, around 7,300 borrowers had their available balances reduced by more than $10,000 overnight, the CFPB said.
In a statement, ACI said that the consent order is related to the “previously disclosed” inadvertent transmission of ACH files to its network during a test of the recently acquired Speedpay bill payment platform in April 2021.
“An internal review determined that ACI’s policies and procedures were not followed. ACI took swift action to reverse the ACH entries and prevent any consumer loss. At all times during and after the error, consumers’ money and personal information remained safe,” the company wrote in a statement.
ACI also settled a consumer class action arising from the error in May. The company expects most of the costs will be covered by third parties in both the consent order and the lawsuit.