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The Biden administration has told the online banking group Chime it must pay $4.55 million for failing to issue refunds in a timely manner to customers who had closed their accounts.
The Consumer Financial Protection Bureau announced Tuesday that Chime must provide at least $1.3 million in compensation to consumers who were harmed and pay a $3.25 million penalty for continually failing to debit consumers in a timely manner after they had closed their accounts with outstanding balances — including thousands of instances when Chime waited at least 90 days.
“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,” including running up credit card balances, CFPB Director Rohit Chopra said in a statement. “Fast-growing financial firms must treat their customers fairly and understand that federal law is not a suggestion.”
In many cases, affected customers could not cover basic living expenses, the CFPB said.
It said Chime is responsible for processing account payments, though it acknowledged it does so by contracting with a third-party payment processor.
It said Chime is also responsible for nearly all consumer communications concerning accounts, as well as how they are serviced, including with its partner banks.
In a statement, Chime said the majority of the delayed refunds were caused by a ‘configuration error’ with a third-party vendor in 2020 and 2021.
It said its settlement agreement with the CFPB “reflects our belief that the timely handling of customer matters is critical, even amid the pandemic’s unique challenges.”
‘When Chime discovered the issue, we worked with our vendor to resolve the error and issued refunds to impacted consumers,’ it said.
‘We share the Bureau’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,’ it said.