CFPB v. Synapse Financial Technologies - Consumer Protection Enforcement

CFPB Enforcement Actions

Filed September 12th, 2025

Detected February 7th, 2026

Summary

The CFPB has taken enforcement action against Synapse Financial Technologies, Inc. for alleged violations of the Consumer Financial Protection Act, resulting in a $1 civil money penalty and injunctive relief. The action stems from Synapse's failure to maintain adequate records of consumer funds, leading to a shortfall of $60-90 million and loss of access to funds for consumers.

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What changed

The Consumer Financial Protection Bureau (CFPB) has filed and obtained a stipulated final judgment and order against Synapse Financial Technologies, Inc. in an adversary proceeding within Synapse's chapter 11 bankruptcy case. The CFPB alleges that Synapse violated the Consumer Financial Protection Act by failing to maintain accurate records of consumer funds, which resulted in a shortfall of between $60 and $90 million. This failure caused consumers to lose access to their funds for weeks or months, with many not receiving their full account balances. The final judgment includes injunctive relief, such as a prohibition on selling customer information, and imposes a $1 civil money penalty.

This enforcement action highlights the critical importance of accurate record-keeping and fund reconciliation for fintech companies and their partnering banks. Regulated entities, particularly those in the payments and fintech sectors, must ensure robust internal controls and compliance with record-keeping requirements to prevent consumer harm and potential regulatory penalties. The CFPB's action, including the civil penalty and injunctive relief, underscores the agency's commitment to protecting consumers from financial losses due to operational failures and inadequate compliance by financial technology providers.

Source document (simplified)

Synapse Financial Technologies, Inc.

On August 21, 2025, the Bureau commenced an adversary proceeding and filed a complaint and proposed stipulated final judgment and order against Synapse Financial Technologies, Inc., which the court entered on September 12, 2025. Synapse is a Delaware corporation with its principal place of business in Woodland Hills, California that provided proprietary technology and software that acted as a bridge between nonbank fintech platforms that offered banking services to consumers and traditional partnering banks. On April 22, 2024, Synapse filed for chapter 11 bankruptcy protection. The Bureau alleged 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. The partnering banks determined that the total funds they were holding for consumers was less than the total amount of consumer funds reflected in records Synapse provided to them, reflecting a shortfall of between $60 and $90 million. Consumers did not have any access to their funds for weeks or months as the partnering banks reconciled their records with Synapse’s records and then distributed funds to consumers, and many consumers have not received the full amount of their account balance. The stipulated final judgment provides for appropriate injunctive relief, including a prohibition on the sale of customer information, and a $1 civil money penalty, which enables the Bureau to access the civil penalty fund for purposes of redressing harmed consumers.