PHILADELPHIA, PA – In a joint endeavor, Attorney General Michelle Henry led a coalition of 50 Attorneys General to announce a $10 million settlement with payment processor ACI Worldwide, over a colossal mishap last year that led to unauthorized withdrawals totaling over $2 billion from mortgage holders.
This error occurred amidst a system test in April 2021, when ACI was a third-party vendor for Nationstar Mortgage, publicly known as Mr. Cooper. Despite many withdrawals being either blocked or reversed, a staggering 1.4 million transactions were processed, adversely affecting 477,000 consumers.
The snag rooted from significant flaws in ACI’s data privacy and security protocols, alongside technical infrastructure concerning their payment platform. On the day of the incident, ACI was testing its Speedpay payment platform and erroneously submitted real consumer data from Mr. Cooper mortgage holders into the Automated Clearing House (ACH) system, which facilitates online payments. Consequently, unauthorized mortgage payment withdrawals were attempted from the bank accounts of Mr. Cooper customers, sometimes multiple attempts per consumer, leading to a cascade of overdraft and insufficient funds fees for many.
Attorney General Henry underscored the severity of ACI’s blunder, stating, “We are holding ACI accountable for its massive payment processing error, which caused consumers to incur overdraft and other fees, and emotional distress caused by losing hard-earned dollars through no fault of their own.”
She added that the hefty penalties levied against ACI should serve as a stern industry warning to exercise extreme caution with customer data and eschew the use of real customer data for testing unless devoid of reasonable alternatives.
The settlement delineates corrective measures ACI must adhere to, preventing future recurrences of such incidents. Key measures include mandating the use of artificially created data for system or software testing, and segregating any testing or developmental work from consumer payment systems.
The settlement apportions $270,726 to Pennsylvania, encompassing $256,060 in civil penalties and $10,000 in costs. Consumers who bore the brunt of this debacle have been notified by the class action settlement administrator and have received restitution either from ACI or through other related settlements.