Dive Brief:

• Fintech Bilt Technologies will reimburse about 500 newly identified customers affected by the company’s transition to a new bank partner, the Consumer Financial Protection Bureau said Tuesday.
• “Following our discussions and at our direction that Bilt ensures full redress, Bilt notified the CFPB that they proactively reached out to the limited number of potentially-affected customers and offered to reimburse them for any overdraft fees, late fees, or insufficient funds fees related to the transition,” the agency said in a news release.
• The fintech is reviewing requests for fee reimbursement and will provide redress by Thursday, said the CFPB, which “has been working to ensure consumers affected by Bilt’s transition to a new bank partner are appropriately remedied.” 

Dive Insight:

Bilt declined to comment Wednesday on how many total customers will be reimbursed.

The company’s card transition in February “attracted unexpectedly high demand, and some of our members experienced gaps in service that are simply unacceptable to us,” Bilt said Wednesday in a statement. 

“In response, we increased our customer service capabilities to address this and proactively communicated with any impacted members,” the company said. “All outstanding issues relating to the card transition in February have been addressed and resolved.”

New York City-based Bilt, which offers credit cards that customers can use to make rent payments, and its previous bank partner, Wells Fargo, cut ties last year. The fintech then linked with Column Bank to issue cards and fintech Cardless to service cards. Existing Bilt customers could switch to a Wells Fargo credit card or transition to Bilt’s card with its new partners.

But during the February transition, customers “encountered a stunning range of harmful errors and breakdowns,” consumer group Protect Borrowers told CFPB Acting Director Russ Vought in a March letter. 

That included allegedly debiting customers’ bank accounts for rent and mortgage payments which Bilt didn’t pass on to landlords, and providing subpar customer service via artificial intelligence-powered chatbots, said the group, which urged Vought to supervise Bilt and take enforcement actions if necessary.

Additionally, some customers weren’t able to make payments on outstanding balances still held at Wells Fargo, or those balances were transferred to new cards without their authorization, said Sen. Elizabeth Warren, D-MA, citing news reports. 

The Senate Banking Committee’s ranking member last month pressed Bilt CEO Ankur Jain for information on the issue, saying the company’s practice of immediately debiting rent payments raises questions about its compliance with the Credit Card Accountability Responsibility and Disclosure Act of 2009.

“Bilt has yet to provide a reasonable explanation for why its transition between bank partners caused such turmoil for its customers,” or “clarify the extent to which customers’ rent payments were delayed, denied, or lost and how Bilt intends to rectify the situation for consumers,” Warren wrote May 27. 

Warren also cited reports that Bilt is once again working with embattled Evolve Bank & Trust to facilitate rent payments. Evolve has been accused of misconduct in relation to the 2024 bankruptcy of middleware provider Synapse.

A Bilt spokesperson didn’t immediately respond to a related question.  

Warren noted the CFPB would typically “take the initiative” to supervise the company and decide whether violations occurred.

During the second Trump administration, the Vought-led CFPB has dropped enforcement actions and lawsuits initiated during the Biden administration, while pursuing deep staff cuts and conveying intentions to shutter the agency. 

On Tuesday, the CFPB sought to contrast its approach to the Bilt issue with that of the bureau under Biden-era Director Rohit Chopra, saying its “collaborative process” illustrated the agency’s enforcement principles of “addressing actual consumer harm, due process, collaboration, and efficiency.”

“Instead of initiating a protracted investigation, followed by a public enforcement action, which could be litigated for years before consumers get any redress, as the Biden CFPB would have done under the former Director Chopra, this leadership engaged with Bilt directly and collaboratively,” the agency said in the release. “This meant that within weeks of the meeting, additional consumers were already receiving redress.”

The CFPB also said it reviewed the steps the company took to guarantee transition-related technical issues were resolved. “Bilt’s documentation submitted to the CFPB appears to show that it has completed the process and its systems are back on track,” the agency said. 

The CFPB said it will monitor Bilt’s efforts “until it is satisfied that full redress will be provided” and plans to provide an update at that time.