A small credit union is making serious allegations against thefinancial technology giant Fiserv.

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The $28 million Parks Heritage Federal Credit Union in GlenFalls, N.Y., located about 60 miles north of Albany, N.Y., accusedthe Fortune 500 corporation in a 26-page civil lawsuit of fraud,breach of contract and negligent misrepresentation. It also claimedFiserv's account processing solution is inundated with flaws, bugsand defects that compromised the integrity of and misrepresentedParks Heritage. The credit union is seeking a monetary judgement ofat least $2.5 million and punitive damages, and wants out of itsmaster agreement with the Brookfield, Wis.-based Fiserv.

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“Parks Heritage Federal Credit Union takes its commitment tomember service seriously,” Charles J. Nerko, a New York-basedlawyer representing the credit union, said. “We will takeappropriate legal actions to protect the credit union and itsmembers.”

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Anthony LaPointe, president/CEO of Parks Heritage, declined tocomment.

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Ann S. Cave, public relations director for Fiserv, said thecompany does not comment on litigation. As of the afternoon of Nov.8, Fiserv had not filed a legal response to the credit union'sallegations in U.S. District Court in New York City, where the casehas been litigated since last month.

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This is the second time since 2014 that Fiserv has been sued bya credit union that made the same accusation in its lawsuit – fraudand other allegations about Fiserv's software performance.

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In its November 2014 civil lawsuit filing, the $734 millionWildfire Credit Union in Saginaw, Mich., said it had initiallyexpressed interest in Fiserv's ill-fated Acumen core, which hadbeen billed as state-of-the-art but was killed off when Fiservbought Open Solutions Inc. and its DNA core to fill that higher-endmarket niche.

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In various meetings with Fiserv, Wildfire alleged companyrepresentatives made “false representations,” including that DNAcan do everything Wildfire wanted it to do because it is open,flexible and can write applications, and that Fiserv would hit ahome run with the conversion. According to Wildfire, the projectmanager assigned by Fiserv to oversee the core conversion had noworking knowledge of DNA or any of the other products and servicesthat Wildfire had purchased.

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The Michigan cooperative claimed it had been damaged by Fiserv'sactions, not only by the fact that the company retained more than$1.3 million that the credit union had already paid to Fiserv, butbecause of the loss of productivity and employee hours that werespent trying to assist in a platform conversion, which allegedlycould not be achieved successfully or timely.

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In a counterclaim, Fiserv denied all of these allegations. LastJune, however, Wildfire and Fiserv agreed to a confidentialout-of-court settlement.

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The Parks Heritage lawsuit claimed that in many instances Fiservdestroyed the cooperative's information, denied its members accessto information and funds, compromised the integrity of the creditunion's information and misrepresented information to ParksHeritage and its members.

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Although the credit union said in court documents that it wasusing a Fiserv account processing solution, it did not specifywhich platform it utilized. The master agreement is confidentialand is not publicly available. In its lawsuit, Parks Heritage doesnot state when it signed the master agreement with Fiserv.

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The credit union's lawsuit lists about 35 specific examples ofproblems that were allegedly caused by Fiserv's software. Thelawsuit does not make clear when these problems began, but some ofthem date back to 2014 and 2015 while most of them occurred thisyear.

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One of the most troubling examples was that members had beenrepeatedly locked out their online bank accounts. When thesemembers attempted to log in, Fiserv presented security questionsthat did not correspond with the members' accounts or falsely toldmembers that the answers to their security questions wereincorrect.

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Fiserv also repeatedly led the credit union and others tobelieve that these member accounts had been hacked or that membershad been victimized by identity theft, according to the lawsuit.Even though the problem persisted for months, Fiserv didn't fix it,forcing Parks Heritage to manually perform account resets formembers and deal with the associated member complaints.

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The lawsuit, however, does not specify how many members wereaffected or whether the credit union lost members because of theseissues. As of September, Parks Heritage serves 3,683 members. Infact, membership has increased for the credit union from 3,606 in2014 to 3,634 in 2015, according to its call reports.

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Other problems included members being denied access to Fiserv'svirtual branch and mobile banking system. These channels were alsounable to display member balances. Members were also unable toaccess Fiserv's Popmoney feature and use their debit cards.

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According to the lawsuit, on 42% of the business days in January2016, Parks Heritage was denied access to Fiserv's CUSA system andneeded to place service calls to Fiserv so that access could berestored. Still, after that, Fiserv continued to intermittentlydeny Parks Heritage access to this system.

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What's more, in February 2016, Parks Heritage notified Fiservthat data in the credit union's cash transaction/suspiciousactivity report was missing. According to Parks Heritage, thedestruction of this information occurred after Fiserv performedwhat it claimed to be an upgrade to its system.

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Additionally, Fiserv's remote check capture system has also beenunusable, according to the lawsuit. When the system underwent anupgrade that a Fiserv representative said would improve the remotecheck capture system's security, it actually delayed deposits.Among the problems with the remote check capture system is thesystem's inability to merge check images into a daily file and itsinability to place automatic holds on remote-capture items, ParksHeritage alleged.

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And for nearly five months, a credit union employee that usedFiserv's CUSA system's batch processing functionality received anapplication error with a red X appearing across the screen whenattempting to post ACH exceptions. Subsequently, Fiserv corruptedthe corresponding files and caused Parks Heritage to miss the ACHreturn deadline.

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But Parks Heritage noted these incidents described in itslawsuit are illustrations only.

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“Fiserv has engaged in other relevant acts, omissions,concealments and misrepresentation, including through itsstandardized coding, policies and business practices,” the creditunion alleged. “Parks Heritage believes that additional incidentsof Fiserv's misconduct will be identified after a reasonableopportunity for further investigation and discovery.”

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Using Fiserv's solution also has “imperiled” the credit union'sability to comply with the law, Parks Heritage alleged.

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For example, Fiserv incorrectly calculated the health savingsaccount contribution limit for members, failed to provide requireddisclosures for loans and sent text messages via an auto dialer toconsumers who did not provide consent to receive thosemessages.

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Parks Heritage also alleged Fiserv repeatedly acted in badfaith.

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“Despite Parks Heritage paying a monthly fee for ongoingservices from Fiserv, Fiserv has improperly solicited additionalfees and contracts from Parks Heritage for upgrades necessary forlegal compliance or continued viable use of the software,” thecredit union stated. “For example, in a May 31, 2016 notice, Fiservadvised Parks Heritage that it would have to pay additional fees toensure compatibility with Windows 10, an industry-standardoperating system.”

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