CFPB and Bankrupt FinTech Platform Enter Consent Order Resolving CFPA Claims
On August 21, 2025, the CFPB and a company that provided a software and technology platform for consumers to transfer funds between banks and fintechs entered a consent order in the U.S. Bankruptcy Court for the Central District of California, resolving claims that the Company violated the CFPA.
According to the CFPB’s adversary proceeding complaint, the Company was responsible for directing consumer fund transfers, which included directing funds into partner banks where they were held in an omnibus subsidiary account owned by the Company for the benefit of consumers. Many fintechs used the Company’s platform to embed banking services into their offerings, such as instant payment features and specialized credit and debit cards. But, by 2023, the Company’s records did not match those of its original partner bank, which held tens of millions of dollars less than the Company reported holding on the platform. The partner bank and the Company publicly blame one another for this discrepancy. The Federal Reserve Board and at least one fintech company have initiated actions against this partner bank.
The Company declared Chapter 11 bankruptcy in April 2024 and sought court approval for an asset purchase agreement with a potential buyer that would have transferred all business operations and required the Company to resolve its public dispute with the partner bank. The Company and partner bank could not resolve these issues and, by May 2024 it was apparent that the discrepancies the Company had with the partner bank were more widespread, and that the Company’s records did not match multiple partner banks. The Company stopped providing regular data and access to the platform containing consumer account data to other partner banks. As a result, multiple partner banks froze all account activity while they determined distributions to consumers. During this time, thousands of consumers reportedly could not access their money, and some suffered major economic hardships and did not receive the full amount of funds they deposited using the Company’s platform.
The CFPB filed an adversary proceeding in the Company’s bankruptcy case alleging that, by failing to maintain adequate records of the locations of consumer funds and failing to ensure their records matched those of the partner banks, the Company engaged in unfair acts or practices under the CFPA. On the same day as filing the adversarial action, the Company and the CFPB also filed the consent order, in which the Company agreed to resolve the CFPB’s allegations, while neither admitting nor denying them.
The consent order requires the Company to: cease business operations; not sell customer information; pay a $1 civil money penalty; and cooperate with the CFPB to assist in consumer fund recovery.
