Dwolla Inc., a Des Moines-based digital payment startup, agreed to pay a $100,000 penalty and improve its data security practices as part of a consent order that the bureau issued Wednesday. Without alleging that the company was breached, the bureau accused Dwolla of overstating the measures it took to protect consumers’ personal information between December 2010 and 2014.
The consent order, which requires the company to fix its security practices and conduct biannual risk assessments, represented the five-year-old agency’s first step into territory traditionally policed by the Federal Trade Commission. In August, a federal court affirmed the FTC’s authority to regulate cybersecurity in a landmark case involving Wyndham Hotels and Resorts.
“Consumers entrust digital payment companies with significant amounts of sensitive personal information,” CFPB Director Richard Cordray said in a prepared statement Wednesday. “With data breaches becoming commonplace and more consumers using these online payment systems, the risk to consumers is growing. It is crucial that companies put systems in place to protect this information and accurately inform consumers about their data security practices.”
Dwolla, which had about 650,000 customers as of May 2015, did not admit or deny the allegations and agreed to a relatively small penalty for the CFPB, according to the consent order.
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