Hello Digit has been fined by the US Consumer Financial Protection Bureau (CFPB) for using a faulty algorithm that caused overdrafts and overdraft penalties for customers.

Hello Digit has a personal-finance-management app that promotes automated savings.

Hello Digit uses a proprietary algorithm to make automatic transfers from consumer checking accounts, called “auto-saves,” to an account held in Hello Digit’s name for the benefit of the consumers. The tool is designed to help people put aside money for vacations or rainy days.

The CFPG said that the US FinTech had lied to its consumers about its automated savings algorithm and was meant to save people money but instead: “falsely guaranteed no overdrafts with its product, broke its promises to make amends on its mistakes, and pocketed a portion of the interest that should have gone to consumers”.

The company has been fined $2.7 million and has been forced to pay reimburse requests for the overdraft charges it had previously denied.

“Hello Digit positioned itself as a savings tool for consumers having trouble saving on their own,” said Rohit Chopra, third director of the Bureau. “But instead, consumers ended up paying unnecessary overdraft fees.”

He added: “Companies have long been held to account when they engage in faulty advertising, and regulators must do the same when it comes to faulty algorithms.”

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