The New Jersey Department of Banking and Insurance and 43 other state financial agencies have reached settlements with ACI Payments, Inc. for erroneously initiating electronic transactions totaling $2.3 billion from the accounts of 480,000 mortgage-holders serviced by the business Mr. Cooper (formerly known as Nationstar Mortgage, LLC). State regulators levied $10 million in fines through a multistate enforcement action with support from the Conference of State Bank Supervisors. Additionally, 50 state attorneys general, including the attorney general of New Jersey, levied an additional $10 million in fines to ACI, in coordination with state regulators.

ACI Payments, a subsidiary of ACI Worldwide Corp., is a state-regulated money services business licensed in New Jersey and nearly all other U.S. states (NMLS ID 936777). Mr. Cooper offered ACI’s Speedpay product for its customers to schedule their monthly mortgage payments, enabling automatic transfers of authorized mortgage payments from their personal bank accounts to Mr. Cooper. The violations occurred when ACI Payments erroneously used live customer data in a test of its Speedpay platform, causing unexpected and sometimes multiple mortgage payments from customer accounts. In some cases, these transactions exposed consumers to overdraft or insufficient funds fees.

“New Jersey homeowners need the assurance that the companies that have access to their hard-earned money are acting properly. This company initiated illegal transactions from the accounts of more than 17,000 New Jersey mortgage holders. While consumers that had funds erroneously withdrawn or endured fees as a result of the error received restitution, it is important for companies to understand that improper conduct will not be tolerated,” said Acting Commissioner Justin Zimmerman.  “Today’s action serves as a reminder that the department will act if our regulated entities do not fulfill their obligation to protect consumers’ information and funds.”

In total, 17,579 New Jersey mortgage holders had withdrawals initiated, however, only one individual had funds removed from their account. Eighty-two of these mortgage holders were affected by fees due to the withdrawal attempt. The company initiated electronic transactions totaling $118 million among these consumers.

“Payment systems that promise fast and speedy bill processing must never be compromised by exorbitant risk and shoddy compliance,” said Attorney General Matthew J. Platkin. “Consumers need to know that if they use and rely on electronic bill payment services, they will not be harmed financially by faulty automated clearinghouse withdrawals from their bank accounts, leaving them short. Companies operating in this space have a duty to provide robust risk management to prevent this sort of mistake in the first place.”

Upon notification of the incident from ACI Payments, state regulators commenced a multistate money transmission investigation reviewing all aspects of the event, including investigating the facts and circumstances surrounding the erroneous transactions, evaluating consumer impact, analyzing the root cause of the incident, and evaluating the remedial steps taken by the company.

This enforcement action orders the following of ACI Payments, Inc.:

• Risk and Compliance Programs – Maintain a comprehensive Enterprise Risk Management Program and a Third-Party Risk Management Program tailored to the nature, size, complexity and risk profile of ACI.
• Agreement Monitoring – Regular reporting (for two years) to a state regulator monitoring committee to ensure both the adequacy of the risk management programs and compliance with the order.
• Administrative Costs and Penalties – Payment of $10 million in fines, after administrative costs are paid, the fines will be split equally amongst the participating states.

State financial regulators license and supervise over 33,000 nonbank financial services companies through the Nationwide Multistate Licensing System (NMLS), including mortgage companies, money services businesses, consumer finance providers and debt collectors. New Jersey consumers can submit complaints about nonbank financial services companies by contacting the department’s Consumer Inquiry and Response Center at 1-800-446-7467. Consumers can also verify that a company is licensed to do business in their state, and view past enforcement actions, by visiting NMLS Consumer Access.

Click HERE to read the enforcement action which includes the list of participating states.