Dwolla got slapped down hard on Wednesday (March 2) by the Consumer Financial Protection Bureau for a series of security violations. But due to a dearth of meaningful federal security laws, CFPB’s $100K fine of Dwolla had to follow in the footsteps of fellow federal regulator Federal Trade Commission. They can’t punish a company for what it did nearly as easily as they can punish it for not doing what it says.
That said, once Dwolla opened the door to federal investigators by boasting about its security on its Web site, every security violation discovered was fair game. Takeaway: In the same way that marketers of publicly-held companies were beaten down by senior staffers from investor relations to never say anything publicly without IR’s blessing, payment facilitators today must reign in anything involving security that even smells a little of hype. See? Our mothers were right. Boasting can deliver real problems. Once those doors were opened, according to a federal consent order published on Wednesday, security violations aplenty were found.