(WNY News Now) – A coalition of 48 state attorneys general, the District of Columbia, and Puerto Rico reached a $10 million settlement with payment processor company ACI Worldwide regarding a 2021 testing error that led to $2.3 billion in unauthorized withdrawals from mortgage holders’ accounts, with New York receiving $575,000 in penalties from the settlement.

U.S. – In a significant legal development, a multistate coalition consisting of 48 state attorneys general, the District of Columbia, and Puerto Rico has successfully secured a $10 million settlement from payment processor company ACI Worldwide. This resolution stems from a 2021 incident in which a testing error by ACI resulted in the unauthorized withdrawal of $2.3 billion from the accounts of mortgage holders, including approximately $172 million from nearly 27,000 New Yorkers.

The multistate investigation concluded that the unauthorized withdrawals occurred due to significant defects in ACI’s privacy and data security procedures and its technical infrastructure, specifically related to the Speedpay platform. ACI Payments, a subsidiary of ACI Worldwide Corp., serves as a payment processor for various third-party clients, including mortgage servicers. Notably, Nationstar Mortgage, also known as Mr. Cooper, offered ACI’s Speedpay product to its customers, allowing them to conveniently schedule and electronically pay their monthly mortgage payments through the Automated Clearing House system.

The critical incident occurred on April 23, 2021, when ACI was conducting tests on the Speedpay platform. During this testing, ACI erroneously submitted live Mr. Cooper consumer data into the clearing house system, resulting in the inappropriate withdrawal of mortgage payments from hundreds of thousands of Mr. Cooper customers on a day that had not been authorized or expected. In numerous cases, consumers found themselves facing multiple attempted mortgage payment withdrawals from their personal bank accounts. While the majority of these withdrawals were ultimately reversed or did not go through, a staggering 1.4 million transactions totaling $2.3 billion were processed, impacting 477,000 Mr. Cooper customers. Consequently, some affected consumers were unable to access their money and incurred overdraft or insufficient funds fees.

It’s important to note that impacted consumers have already received restitution from ACI and other related settlements. The settlement reached today is another step towards addressing the widespread financial inconvenience caused by this testing error.

In response to the investigation’s findings, ACI Worldwide is required to implement measures aimed at preventing any such incidents in the future. These measures include the mandate to use artificially created data rather than real consumer data when conducting system or software tests. Moreover, ACI must segregate any testing or development work from its consumer payment systems, ensuring a clear separation between experimental activities and systems affecting consumers’ financial transactions.

New York Attorney General James expressed gratitude for the collaborative efforts of her fellow attorneys general in holding ACI accountable for the harm and stress inflicted on homeowners.