CFPB Orders Chime Financial to Pay $4.55 Million Over Delayed Account Balance Refunds

The Consumer Financial Protection Bureau has ordered Chime Financial to pay a $3.25 million civil money penalty and at least $1.3 million in redress to affected consumers after finding that the fintech company failed to refund remaining account balances within 14 days in thousands of instances — and in thousands of cases not even within 90 days — following the closure of customer checking and savings accounts. The CFPB determined that the practice constituted an unfair act under the Consumer Financial Protection Act, the agency announced on 7 May 2024.

Chime designs and services consumer banking accounts on behalf of two FDIC-insured partner banks, a structure common among fintech companies that provide bank-like services to retail customers without holding a banking licence in their own name. The enforcement action focused on the period following account closure, during which affected consumers were left without access to their funds.

UNFAIR PRACTICE FINDING UNDER CONSUMER FINANCIAL PROTECTION ACT

Under the Act, a practice qualifies as unfair when it causes or is likely to cause substantial injury to consumers, when the injury is not reasonably avoidable by consumers themselves through the exercise of ordinary care, and when the harm is not outweighed by countervailing benefits to consumers or to competition. The Bureau's determination on all three grounds underpins the enforcement order issued against Chime.

REDRESS ORDER

The order requires Chime Financial to pay at least $1.3 million in redress to the consumers harmed by the delayed refund practice, in addition to the $3.25 million penalty. The Bureau said consumers left without access to refunds often cannot cover basic expenses and may turn to costly alternatives such as credit cards or payday loans.