Attorney General James and Multistate Coalition Secure $10 Million from Mortgage Company for Wrongfully Taking Money from Homeowners
New York Will Receive $575,000 from Settlement with ACI Worldwide
NEW YORK – New York Attorney General Letitia James and a multistate coalition of 48 state attorneys general, the District of Columbia, and Puerto Rico today secured $10 million from a payment processor company, ACI Worldwide, over a 2021 testing error that led to the unauthorized withdrawal of $2.3 billion from the accounts of mortgage holders, including nearly $172 million from nearly 27,000 New Yorkers. A multistate investigation determined that the unauthorized withdrawals were possible due to significant defects in ACI’s privacy and data security procedures and technical infrastructure. New York will receive $575,000 in penalties from the settlement. The money that was wrongfully withdrawn from mortgage holders was refunded to homeowners in 2021.
“Hundreds of thousands of homeowners nationwide and thousands of New Yorkers had money wrongfully withdrawn from their accounts because of ACI’s failure,” said Attorney General James. “Companies must be more diligent when handling consumers’ data and payment information to not cause worry and panic among consumers. I thank my fellow attorneys general for their partnership to hold ACI accountable for the harm and stress it caused homeowners.”
ACI Payments, a subsidiary of ACI Worldwide Corp., is a payment processor for a variety of third-party clients, including mortgage servicers. Nationstar Mortgage, known publicly as Mr. Cooper, offered ACI’s Speedpay product to its customers so they could schedule and electronically pay their monthly mortgage payments through the Automated Clearing House system. On April 23, 2021, ACI was testing the Speedpay platform when it erroneously submitted live Mr. Cooper consumer data into the clearing house system. This resulted in ACI erroneously attempting to withdraw mortgage payments from hundreds of thousands of Mr. Cooper customers on a day that was not authorized or expected. In many cases, consumers were subjected to the attempted withdrawal of multiple mortgage payments from their personal bank accounts. While the vast majority of withdrawals did not ultimately go through or were reversed, 1.4 million transactions totaling $2.3 billion were processed, impacting 477,000 Mr. Cooper customers. While ACI took corrective steps to minimize the impact of the testing error, in some cases consumers were not able to access their money and were forced to incur overdraft or insufficient funds fees. Impacted consumers have received restitution from ACI and through other related settlements.
The investigation determined that the April 2021 incident was possible due to significant defects in ACI’s privacy and data security procedures and technical infrastructure related to the Speedpay platform. In addition to paying penalties, today’s settlement requires ACI to take steps to avoid any future incidents, including requiring ACI to use artificially created data rather than real consumer data when testing systems or software, and requiring ACI to segregate any testing or development work from its consumer payment systems.
This case was handled by Assistant Attorneys General Melvin Goldberg and Elizabeth M. Lynch of the Consumer Frauds and Protection Bureau. The Consumer Frauds and Protection Bureau is a part of the Division of Economic Justice and led by Bureau Chief Jane Azia and Deputy Bureau Chief Laura Levine. The Division of Economic Justice is led by Chief Deputy Attorney General Chris D’Angelo and overseen by First Deputy Attorney General Jennifer Levy.