Chime Financial was ordered by the Consumer Financial Protection Bureau to pay more than $4.5 million for failing to give consumers timely refunds when their accounts were closed.
The CFPB fined Chime roughly $3.3 million and ordered the San Francisco challenger bank to pay $1.3 million in restitution. The bureau said in a 28-page consent order that thousands of consumers waited months to get refunds, creating “significant financial harm.”
Impacted consumers will receive about $150 in redress if they had a minimum unrefunded balance of $10 and were not refunded by Chime within 14 days of closing their account.
Chime is funded by venture capital, but it offers banking services through Stride Bank and The Bancorp Bank. Chime agreed in February to pay a $2.5 million California’s Department of Financial Protection and Innovation to addresses lapses in responding to consumer complaints.
“Fast-growing financial firms must treat their customers fairly and understand that federal law is not a suggestion,” CFPB Director Rohit Chopra said in a press release. “Chime’s customers had to wait weeks or months for access to their own money and were forced to use alternative funds to cover their essential expenses.”
The settlement “reflects our belief that the timely handling of customer matters is critical, even amid the pandemic’s unique challenges,” Chime said in a prepared statement.
Chime said most of the refund delays were due to a configuration error with a third-party vendor in 2020 and 2021.
“When Chime discovered the issue, we worked with our vendor to resolve the error and issued refunds to impacted consumers,” the company said. “We share the [CFPB’s] goal to create a more competitive and accessible financial landscape that is good for everyday consumers. We look forward to continuing in this mission and are pleased to have resolved this matter.”