Chime Fined $3.25m by CFPB for Delayed Balance Refunds

US fintech Chime has been fined $3.25 million by the Consumer Financial Protection Bureau (CFPB) for delays in issuing balance refunds to consumers after the closure of their checking and savings accounts.

The CFPB revealed that Chime’s policy, until 2021, was to process and mail refund checks within 14 days of an account’s closure. However, it found that thousands of consumers experienced delays, with some waiting weeks or even months for their refunds, contrary to the agreed timeframe.

According to the regulator, affected consumers faced difficulties in covering basic living expenses and often resorted to costly credit alternatives like credit cards or payday loans due to the delays.

Chime, which partners with two FDIC-insured banks, acknowledged that the majority of the delays were caused by a configuration error with a third-party vendor during 2020 and 2021. Upon discovery, Chime rectified the error and issued refunds to affected consumers.

In response to the fine, Chime stated its commitment to timely customer service, acknowledging the importance of resolving customer matters promptly, especially amidst the challenges posed by the pandemic.

Alongside the fine, Chime is obligated to pay at least $1.3 million in redress to affected consumers, in addition to the sum to be paid to the CFPB’s victims relief fund.

CFPB director Rohit Chopra emphasised the importance of financial firms treating their customers fairly and complying with federal law, stating that fast-growing firms must understand that adherence to regulations is imperative, not optional.