What Happened at VyStar Credit Union?
And why other credit union customers should take note
Credit unions can be great alternatives to traditional banking. They are owned by the members, they tend to offer a greater range of services to customers who are typically un-banked or under-banked, and they can even offer access to credit that is a far better alternative to payday loans.
But.
Sometimes, they take a wrong turn.
Recently, I wrote about problems at VyStar Credit Union out of Jacksonville, Florida.
The company was fined $1.5 million by the Consumer Financial Protection Bureau (CFPB) for a botched launch of a new online platform that meant some customers couldn’t access essential banking functions (or their cash) for up to six months.
“VyStar and its senior management bungled the credit union’s rollout of a new banking system and left customers stranded without online access to their accounts,” said CFPB Director Rohit Chopra. “VyStar’s careless errors inflicted financial harm on their credit union members.”
While this is not great, VyStar seems to be back on track.
It’s worth noting, though, that the company VyStar used for its failed online platform is still out there signing up new clients.
That company: Nymbus.
As Jason Mikula notes, Nymbus is also involved with:
Michigan State Federal Credit Union (MSUFCU), Gesa Credit Union, PeoplesBank, and ConnectOneBank
And, there were warning signs that Nymbus might not be able to deliver for VyStar.
Specifically, a lawsuit filed by a group of banks alleging that Nymbus had contracted to provide them with a banking platform that “didn’t exist.”
In that suit, filed by the banks against Nymbus, the banks sought to exercise their right to rescind the sale, alleging that Nymbus had breached the sale agreement by failing to transition Sharp BancSystems’ existing customers to the Nymbus platform by the agreed upon date of March 1, 2017.
The blocker to the migration, according to the banks’ suit, was that “the new, state-of-the-art software platform promised by Nymbus” didn’t actually exist.
All of which is to say: Watch out for Nymbus.