On May 7, 2024, the CFPB issued a consent order against Chime Financial for failing to give consumers timely refunds when their accounts were closed. Chime Financial is a nonbank that partners with banks to offer financial products, including checking accounts, savings accounts, and credit cards.
From CFPB Director Rohit Chopra’s statement:
“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. Fast-growing financial firms must treat their customers fairly and understand that federal law is not a suggestion.”
Chime manages payments and customer communication for accounts, including setting policies approved by partner banks. In most instances, when consumers’ checking and savings accounts are closed, Chime automatically refunds remaining balances by check. Until 2021, Chime’s policy, reflected in consumer account agreements, was to process and mail refund checks within 14 days of an account’s closure. However, the CFPB found that the company:
Failed to timely provide consumer refunds. Chime failed to issue consumer refunds within the 14 days based on its policy, including many instances where it failed to refund within 90 days.
Deprived consumers of needed funds to meet their responsibilities. Chime's delayed fund returns caused financial hardship for many consumers, leading to reliance on costly credit options.
The CFPB took action against Chime and ordered the company to:
Pay at least $1.3 million in redress to harmed consumers;
Pay $3.25 million in penalties to the CFPB’s victims relief fund; and
Provide timely refunds as required by the law.
Read the CFPB’s news release here.
The consent order can be found here.