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 their checking and savings accounts were closed.
The CFPB found that Chime’s policy was to process and mail refund checks within 14 days of an account’s closure until 2021, but thousands of consumers experienced delays of weeks or months, with some not receiving refunds within 90 days.
Impacted consumers faced challenges in paying for basic living expenses and had to resort to expensive credit alternatives such as credit cards or payday loans.
Chime partners with two FDIC-insured partner banks to offer financial products and processes account activity through a third-party payment processor.
Chime attributed the delays to a configuration error with a third-party vendor during 2020 and 2021 and worked to resolve the issue when discovered.
In addition to the fine, Chime will pay at least $1.3 million in redress to harmed consumers and the fine will be paid to the CFPB’s victims relief fund.
CFPB Director Rohit Chopra emphasized the importance of financial firms treating their customers fairly and complying with federal law, stating that fast-growing financial firms must understand that federal law is not a suggestion.
