Chime to pay California regulator $2.5M over customer service flaws

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The fintech Chime has agreed to pay $2.5 million to resolve an investigation into its accuracy and responsiveness in customer service transactions, California’s Department of Financial Protection and Innovation said Tuesday.

In a consent order, the DFPI said Chime made “occasional mistakes” in its handling or evaluation of some customer complaints between January and March of 2021. The agency does not detail the errors.

The time period, however, aligns with an article by ProPublica that focuses on instances in which Chime allegedly closed some customers’ accounts against their will. Roughly 920 complaints against Chime had been filed with the Consumer Financial Protection Bureau between April 2020 and the article’s publication in July 2021. Nearly 200 were tagged as involving a “closed account,” ProPublica found.

Chime, at the time, said the complaints were related to the fintech’s attempts to crack down on accounts that used fraudulently obtained unemployment insurance or federal stimulus payments issued early in the COVID-19 pandemic.

“Chime violated consumer protections provided by the California Consumer Financial Protection Law by engaging in unfair acts concerning its handling of customer complaints,” DFPI Commissioner Clothilde V. Hewlett said in a statement Tuesday. “Consumers have a right to their complaints being resolved accurately, fairly and in a timely manner, and the DFPI will continue to ensure these rights are protected.”

Chime, in a statement sent Wednesday to Banking Dive, said it “proactively improved our processes to remedy this at the time and implemented the reforms identified by DFPI.”

As part of the settlement, Chime agreed to establish standards that ensure customer service support is available 24 hours a day, seven days a week, and that staffing and training is adequate. Chime also must submit annual reports to the DFPI on those standards for two years.

“Our settlement reflects the reality of operating at a large scale in a highly regulated industry, and our belief that timely response to customer complaints is critically important,” Chime said in its statement. “This matter has been resolved, and we are pleased to put it behind us.”

This is not the first time San Francisco-based Chime has run afoul of California’s consumer protection regulator. The DFPI in 2021 ordered Chime to stop using language the regulator said falsely portrayed the fintech as a bank, including using “chimebank.com” as its web address prior to February 2020.

“Chime has represented that it has addressed the complaints handling-related issues identified by the Commissioner and continued to improve its customer complaint resolution practices and procedures,” the agency wrote in Tuesday’s consent order complaint. “While the number of mistakes during the Investigation Period was relatively small in comparison to the overall number of consumer complaints received, the mistakes were important to the affected consumers.”

This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter.

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