Illinois Attorney General Kwame Raoul announced a $10 million multistate settlement today with ACI Worldwide Corporation's subsidiary following an erroneous testing that resulted in an attempted unauthorized withdrawal of $2.3 billion from 477,000 mortgage holders' accounts, Illinois Attorney General's Office. The settlement was arranged by 50 attorneys general and seeks to enforce financial responsibility and accountability for companies handling customers' money.
ACI's blunder originated when the company erroneously tried withdrawing $2.3 billion in mortgage payments on behalf of Nationstar Mortgage, also known as Mr. Cooper. The unauthorized withdrawals were falsely initiated through ACI's Speedpay product during a test of the platform on April 23, 2021. In an unfortunate turn of events, live consumer data for Mr. Cooper was inadvertently sent to the Automated Clearing House (ACH) system, per the press release.
Despite the majority of attempted withdrawals being blocked or reversed, approximately 1.4 million transactions worth $2.3 billion were processed. Consequently, this impacted 477,000 Mr. Cooper customers, some of whom incurred overdraft or insufficient-fund fees. Thanks to separate class-action settlements, affected customers have now received restitution.
Thus, ACI will have to take specific steps to avoid comparable situations. Among these will be using artificial test data instead of real customers' data, and isolating testing or development work from its consumer payment systems.
The settlement led by Attorney General Raoul and his colleagues, the Illinois Department of Financial and Professional Regulation, secured another $10 million fine in a separate agreement, along with state agencies across the US. These penalties came into effect after investigations proved the 2021 incident was propelled by systemic errors in ACI's privacy, data security, and Speedpay related technical infrastructure, as detailed by the press release.
The work done by Attorney General Raoul's office in this case, particularly within the Consumer Protection Division, has been instrumental in safeguarding consumers. This ACI settlement emphasizes the need for strong barriers against unauthorized withdrawals from mortgage accounts, and keeping financial companies accountable for the aforesaid protections.
