Senate Banking Committee Chairman Sherrod Brown, D-Ohio, urged the Consumer Financial Protection Bureau to address the risks posed by Chime, a San Francisco fintech that sparked a
Brown sent a letter to acting CFPB Director Dave Uejio Tuesday urging him to address the problems at Chime and other digital-only financial companies that claim to provide financial services to people not served by traditional banks.
Chime launched a broad marketing campaign this year by promising to speed up payments from federal stimulus checks and unemployment insurance, only to abruptly shutter some accounts while alleging fraudulent activity.
“Chime’s abrupt, involuntary closures of its customers’ accounts — and locking them out of access to their funds — can cause lasting damage to their financial condition,” Brown wrote. “There are a number of consumer risks involving nonbanks, from privacy concerns, fraud, data breaches, and proper disclosure that these companies are not actually banks.”
The nonprofit news organization
Chime is not a bank but has marketed itself erroneously as a bank and come under fire for doing so.
The San Francisco-based company was
In addition, the Illinois Department of Financial and Professional Regulation included a $200,000 fine in a similar order against Chime, according to a March 25
The largest so-called neobank, Chime has roughly 12 million customers. It has received 1,077 complaints since the coronavirus pandemic began in March 2020, according to the CFPB’s searchable complaint database.
"Public forums like the CFPB portal are an important way for consumers to voice dissatisfaction, and Chime works with the CFPB to respond to every complaint," said Gabe Madway, a Chime spokesman. "Errors are rare, but if we identify that one was made, we move quickly to make it right with the member."
Chime is not the only neobank to be called out by consumers for abruptly closing accounts. A number of consumers recently lashed out at Varo online for
Brown specified that he wants the CFPB to share its insights about the risks that neobanks pose to consumers and the measures that the CFPB is taking to address those risks.
He also asked Uejio to provide guidance on “any gaps in the regulatory framework that may require Congressional action.”