CFPB Reportedly Finds Hello Digit's Automated Savings Algorithm Caused Overdrafts and Orders Redress with $2.7M Penalty
August 10, 2022
Hello Digit's automated savings product allegedly transferred funds from users' checking accounts via a proprietary algorithm that reportedly caused overdrafts and bank fees despite a "no overdraft" guarantee. The Consumer Financial Protection Bureau (CFPB) reportedly also found the company denied many reimbursement requests and kept interest earned on customer funds. Hello Digit was ordered to provide redress and pay a $2.7M civil penalty.
- Alleged deployer
- hello-digit, oportun-financial-corporation
- Alleged developer
- hello-digit, oportun-financial-corporation
- Alleged harmed parties
- hello-digit-customers, bank-account-holders-enrolled-in-auto-saves, consumers-charged-overdraft-fees-due-to-auto-saves, consumers-denied-overdraft-reimbursement, consumers-whose-accrued-interest-was-retained
Source
Data from the AI Incident Database (AIID). Cite this incident: https://incidentdatabase.ai/cite/1222
Data source
Incident data is from the AI Incident Database (AIID).
When citing the database as a whole, please use:
McGregor, S. (2021) Preventing Repeated Real World AI Failures by Cataloging Incidents: The AI Incident Database. In Proceedings of the Thirty-Third Annual Conference on Innovative Applications of Artificial Intelligence (IAAI-21). Virtual Conference.
Pre-print on arXiv · Database snapshots & citation guide
We use weekly snapshots of the AIID for stable reference. For the official suggested citation of a specific incident, use the “Cite this incident” link on each incident page.