RSSThe Consumer Financial Protection Bureau has reached a proposed settlement with Synapse Financial Technologies for allegedly failing to keep adequate records of the location of consumers’ funds.
The San Francisco-based U.S. Bankruptcy Court Central District of California entered the settlement Sept. 12, 17 months after the Woodland Hills, Calif.-based banking-as-a-service platform filed for Chapter 11 bankruptcy. The settlement includes a ban on Synapse selling customer information along with a $1 civil money penalty, allowing the bureau to pay consumers from its civil penalty fund.
Partnering banks said they had a $60 million to $90 million shortfall of total consumer funds shown in records provided by Synapse. Customers of fintech platforms such as Juno and Copper were reportedly temporarily unable to access their money.
Prior to its bankruptcy, Synapse was a bridge between nonbanks that offer consumer banking services and banks. The company’s service agreement with Evolve Bank & Trust expired in 2023.
“Consumers did not have any access to their funds for weeks or months as the partnering banks reconciled their records with Synapse’s records and then distributed funds to consumers, and many consumers have not received the full amount of their account balance,” according to the bureau.
