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CFPB Reportedly Finds Hello Digit's Automated Savings Algorithm Caused Overdrafts and Orders Redress with $2.7M Penalty

August 10, 2022

The automated savings product of Hello Digit allegedly employed a proprietary algorithm that reportedly led to overdrafts and bank fees, contradicting its 'no overdraft' promise. The Consumer Financial Protection Bureau (CFPB) also found that the company often rejected reimbursement requests and retained interest earned on customer funds. To address these issues, Hello Digit was ordered to provide redress and pay a $2.7M civil penalty. This incident underscores the need for trustworthy AI governance and safe and secure AI practices. For those interested in shaping responsible AI governance through data and AI incident management, join us at HISPI Project Cerebellum TAIM (Govern).

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Matched TAIM controls

Suggested mapping from embedding similarity (not a formal assessment). Browse all TAIM controls

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.