By Hannah Lang
(Reuters) - Digital bank Chime will pay a penalty of $3.25 million to the U.S. Consumer Financial Protection Bureau (CFPB) for failing to issue timely refunds to customers who closed their accounts, and will return at least $1.3 million to customers, the regulator said on Tuesday.
WHY IT'S IMPORTANT
The fine is another example of the CFPB's increasing scrutiny of financial technology companies. The agency has proposed to regulate tech giants' digital payments and smartphone wallet services, and Director Rohit Chopra has called for better risk management at both fintech companies and banks.
In a statement about Chime's penalty, CFPB Director Rohit Chopra said that “fast-growing financial firms must treat their customers fairly and understand that federal law is not a suggestion.”
CONTEXT
The CFPB found that thousands of Chime customers had to wait weeks or even months for refunds after closing their accounts with the company, even though Chime's policy promised refunds within 14 days. That delay "deprived consumers of needed funds to meet their responsibilities," the CFPB said.
In a statement, Chime said that most of the delayed refunds were due to a configuration error with a third-party vendor between 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.
BY THE NUMBERS
As part of the CFPB's order, Chime will pay at least $1.3 million to affected customers, with consumers generally receiving at least $150 if they had at least $10 that was not refunded 14 days after closing their account.
The $3.25 million in penalties Chime will pay to the CFPB will go to the agency's victims relief fund.
(Reporting by Hannah Lang in New York; Editing by Marguerita Choy)
