05-7-2024, 3:58 PM

Biden administration orders online banker Chime to pay $4.55 million over delayed refunds to customers

The Biden administration has instructed the online banking entity Chime to remit $4.55 million for its failure to promptly issue refunds to customers who closed their accounts with the company.

The Consumer Financial Protection Bureau made the announcement on Tuesday, mandating that Chime compensate affected consumers with a minimum of $1.3 million and impose a penalty of $3.25 million. This penalty stems from Chime's recurring failure to timely process refunds for customers who closed their accounts with outstanding balances, with numerous instances where Chime delayed refunds for 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.”

Chime responded with a statement attributing the majority of the delayed refunds to a "configuration error" with a third-party vendor during 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 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."

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