Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings

In April 2021, ACH files associated with one of the Company's mortgage servicing customers were inadvertently transmitted into the ACH network during a test of the Company's payment processing system. The Company took immediate corrective action and issued reversing ACH files, restoring affected accounts.

The Company was named as a defendant in seven class action lawsuits filed in various federal courts purportedly on behalf of consumers whose mortgage accounts were affected by the inadvertent ACH file transmission. The Company settled these lawsuits by establishing a $5.0 million fund out of which payments will be made to class members and for attorneys’ fees and administrative costs. Additional funds totaling $1.5 million could be required to be established under certain circumstances.

The inadvertent ACH file transmission also gave rise to investigations by the U.S. Consumer Financial Protection Bureau (the "CFPB") and state attorneys general in all 50 states, the District of Columbia, and certain U.S. territories as well as money transmission regulators in most of those jurisdictions. The Company settled the CFPB investigation for $25.0 million plus various undertakings. The Company is proceeding to document agreements in principle to settle with the state money transmission regulators and attorneys general for a total of $20.0 million plus various undertakings. The Company believes that the CPFB and state undertakings will not adversely affect it.

The Company expects that insurance will fund substantially all of the settlement payments and costs, including lawyers’ fees, subject to the retained limits and other terms of the applicable policies.

The Company recorded the payable to the CFPB and a receivable from its insurance carriers, which are included in other current liabilities and other current assets, respectively, in the accompanying condensed consolidated balance sheet as of June 30, 2023, for the $25.0 million settlement. Payment was made to the CFPB and funds received from the insurance carriers subsequent to quarter-end. Funds for the potential state and money transmission regulator settlements have been deposited into an escrow account at a bank by the insurance carriers to be disbursed on finalization of the settlement.

The Company is from time to time subject to other claims, litigation and investigations. While the Company believes that none of the currently pending matters is reasonably likely to have material adverse effect on it, there can be no assurance with respect thereto or future matters.