- Fine Imposed on SoFi by FINRA: SoFi, an online lending platform, has been fined $1.1 million by the Financial Industry Regulatory Authority (FINRA) for alleged consumer identification flaws in its cash management brokerage service.
- Failure to Establish Effective Customer Identification and Identity Theft Prevention Programs: According to the FINRA filing, SoFi failed to establish and maintain effective customer identification and identity theft prevention programs for its SoFi Money unit.
- Automated Process for Account Opening: SoFi relied on a largely automated process to approve the opening of around 800 accounts within the SoFi Money service for third parties between December 2018 and April 2019.
- Vulnerability to Fraud: FINRA claims that SoFi’s approach was not reasonably designed to verify customers’ identities, making it vulnerable to fraud perpetrated by third parties using fictitious or stolen identities.
- Fraudulent Activity and Remediation Efforts: Fraudsters used SoFi Money accounts to seize approximately $8.6 million in funds, with around $2.5 million withdrawn through ACH transfers, ATM withdrawals, and debit card purchases. SoFi identified the flaws internally and has undertaken remediation efforts, including increased staff training and enhancements to fraud identification processes and customer verification logic.
- Closure of SoFi Money Unit: SoFi closed down the SoFi Money unit to new customers in June 2022.
