On October 23, 2024, the CFPB announced that it had entered into separate consent orders with a large tech company and a bank over a joint credit card venture. The CFPB alleges that the credit card, which combined the tech company’s software with the credit-backing of the bank, was launched prematurely, which resulted in technical issues. Specifically, the CFPB alleges that the tech company failed to send cardholder transaction disputes to the bank for resolution, and had also failed to adequately disclose material aspects of the payment plans it offered cardholders. The CFPB further alleges that when the bank did receive transaction disputes from the tech company, it violated federal regulations including the Truth in Lending Act (TILA) and Regulation Z by failing to resolve the disputes within the required time and notify consumers of the resolution, failing to conduct reasonable investigations in some instances, and holding consumers liable for amounts at issue in claims of unauthorized use before conducting a reasonable investigation.
Under the consent orders, the tech company agreed to pay a $25 million civil money penalty and the bank agreed to pay $19.8 million in redress to consumers and a $45 million civil money penalty.
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