{"id":19775,"date":"2025-08-22T20:24:23","date_gmt":"2025-08-22T20:24:23","guid":{"rendered":"https:\/\/finderica.com\/?p=19775"},"modified":"2025-08-22T20:24:23","modified_gmt":"2025-08-22T20:24:23","slug":"synapse-engaged-in-unfair-acts-cfpb-files-complaint","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=19775","title":{"rendered":"‘Synapse engaged in unfair acts’: CFPB files complaint\u00a0"},"content":{"rendered":"
\n
\n
\n
<\/figure>\n<\/div><\/div>\n

For an agency in the process of being gutted<\/u><\/ps-link> and possibly shut down, the Consumer Financial Protection Bureau is generating a lot of news.<\/p>\n

On Thursday, the CFPB<\/u><\/ps-link> filed an official complaint and an order against Synapse Financial Technologies, a banking-as-a-service middleman that provided ledgers that monitored transactions moving between fintechs and their partner banks.<\/p>\n

The complaint rehashes some of the problems that emerged from Synapse’s demise. Essentially, Synapse’s ledgers<\/u><\/ps-link> did not match the ledgers of its partner banks, resulting in an estimated shortfall of $60 million to $90 million that Synapse’s fintech end users \u2013 customers of fintechs<\/u><\/ps-link> like Yotta<\/u><\/ps-link>, Juno and Copper \u2013 may never see again. Representatives for Synapse and Evolve Bank did not immediately respond to requests for comment.\u00a0<\/p>\n

“Synapse engaged in unfair acts or practices by failing to maintain adequate records of the location of consumers’ funds and failing to ensure those records matched the records maintained by the Partner Banks,” the CFPB’s complaint states.<\/p>\n

The Bureau alleges that Synapse violated the Consumer Financial Protection Act of 2010 by failing to maintain adequate records of the location of consumers’ funds and failing to ensure those records matched the records maintained by its partnering banks, causing consumers to lose access to their funds.\u00a0<\/p>\n

The complaint does not exonerate the banks that worked with Synapse. It notes that, “at least as of September 2023, if not earlier, both Evolve and Synapse were aware that there was a deficit of tens of millions of dollars in funds that Evolve was holding for End Users, which included consumer funds. Evolve and Synapse have publicly blamed each other for the deficit.” The dispute between the two companies has never been settled, it said.\u00a0\u00a0<\/p>\n

“While the complaint suggests that action or inaction by the partner banks, particularly Evolve, may have had something to do with the losses, it adds nothing to our understanding about where the money actually went,” Todd H. Baker, senior fellow at the Richman Center for Business, Law and Public Policy at Columbia Business and Law Schools, told American Banker.<\/p>\n

Baker does not expect the CFPB to take action against Synapse’s partner banks, though, given its staffing and budget issues. “It will leave bank enforcement to the primary regulators,” he said.<\/p>\n

In an order also filed on Thursday, the CFPB fined Synapse’s estate $1. Charging Synapse this fine will allow the CFPB to use its Civil Penalty Fund to reimburse the Synapse end users who lost money, a move the agency said in June<\/u><\/ps-link> it was thinking of making. According to the CFPB’s latest financial report, as of September 30, 2024, its Civil Penalty Fund had an unallocated balance of $118.9 million.<\/p>\n

“The filing provides official regulatory validation of what consumers experienced \u2014 that Synapse’s record-keeping failures caused substantial harm,” Dara Tarkowski<\/u><\/ps-link>, managing partner of Actuate Law, told American Banker.\u00a0<\/p>\n

However, this complaint could take months or years to resolve, she said. And “if funds are paid to consumers from the civil monetary fund, those distributions, especially with the severely limited staffing at the CFPB could also take years.”<\/p>\n

There’s also a case to be made that the Trump administration’s CFPB will move rapidly \u2014 it was only two months ago, after all, that it first signaled its plan to fine Synapse and give money from the Civil Penalty Fund to Synapse victims. <\/p>\n

“I expect the CFPB will move as quickly as it can to verify claims and disburse money,” Baker said.<\/p>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

For an agency in the process of being gutted and possibly shut down, the Consumer Financial Protection Bureau is generating a lot of news. On Thursday, the CFPB filed an official complaint and an order against Synapse Financial Technologies, a banking-as-a-service middleman that provided ledgers that monitored transactions moving between fintechs and their partner banks.<\/p>\n","protected":false},"author":1,"featured_media":19776,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[218],"tags":[7859,719,4185,4392,1672,1158,1943],"class_list":{"0":"post-19775","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-banking","8":"tag-acts","9":"tag-cfpb","10":"tag-complaint","11":"tag-engaged","12":"tag-files","13":"tag-synapse","14":"tag-unfair"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/19775","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19775"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/19775\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/19776"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19775"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19775"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19775"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}