Digit’s Algorithm Caused Thousands of Overdraft Fees, CFPB Says

A fintech providing automated savings accounts will pay at least $2.7 million for causing consumers to pay overdraft fees because of a faulty algorithm, the CFPB said.

Hello Digit LLC, operating as the fintech Digit, pledged that its proprietary algorithm would automatically withdraw funds from consumers’ checking accounts without accidentally causing them to face overdraft fees, the Consumer Financial Protection Bureau said in a Wednesday enforcement action.

The San Francisco-based company, which marketed itself as a way for consumers to automatically save for rainy days or specific goals like vacations, was so confident in its algorithm that it promised to ...