States Settle with Mortgage Payment Processor over Unauthorized “Testing” Transactions

On October 17, 2023, a payment processor agreed to pay $10 million to 44 state money transmitter regulators, and $10 million to 50 state and territorial attorneys general, over the payment processor’s erroneous use of sensitive customer data when performing internal tests of its billing payment platform.

The state regulators alleged that the payment processor used live customer data when conducting tests of its payment processing platform, resulting in the initiation of electronic mortgage payments totaling approximately $2.3 billion from the accounts of 480,000 consumers. In addition to paying the $20 million, the agreement requires the payment processor to institute risk and compliance programs; and perform regular monitoring and reporting to the state agencies.

The settlement follows a CFPB consent order with the payment processor over the same events.