Chime, the once-high-flying fintech, has agreed to pay $2.5 million to the California Department of Financial Protection and Innovation to settle claims that it violated the state’s consumer financial protection law for tardy handling of customer complaints in 2021.
The DFPI, a consumer protection agency that oversees financial services firms in California, didn’t disclose the specific allegations against Chime. The regulator said it received complaints from Chime customers in 2021 over their accounts and customer service interactions, according to a consent order. DFPI investigated how Chime handled the complaints—submitted from January to March of 2021—during the COVID-19 pandemic and concluded that “occasional mistakes” occurred when it came to “responsiveness to those complaints.”
DFPI said the number of mistakes found during the investigation period was “relatively small” compared with the overall number of complaints received, but “the mistakes were important to the affected consumers.”
A ProPublica report from 2021 said Chime customers filed more than 900 complaints with the Consumer Financial Protection Bureau, a federal agency, from April 2020 to July 2021. In many of those complaints, customers said they couldn’t access their accounts.
Chime did not admit to or deny DFPI’s findings. It has agreed to pay the fine and to enhance its existing customer service procedures, which includes ensuring customer service is available 24/7, according to the Feb. 27 consent order. The company also said it will provide sufficient customer service support staffing and training, while making sure to investigate and implement procedures and policies to ensure complaints are handled promptly. Chime also agreed to report to the DFPI annually on these measures over the next two years.
“Our settlement with the DFPI reflects our belief that timely response to customer complaints is critically important, even amid the pandemic’s unique challenges,” Chime said in a statement on Wednesday.
Founded in 2012, Chime is a neobank that offers traditional financial services such as fee-free checking, savings accounts, and debit cards. It doesn’t have a bank charter but instead partners with the Bancorp Bank and Stride Bank to offer services. Chime is a perpetual IPO candidate. The fintech snagged a $25 billion valuation in 2021, but that has since dropped, Fortune reported in January.
This isn’t the first time DFPI has cited Chime. In 2021, the agency ordered the company to stop calling itself “chimebank.com” to make clear that the fintech wasn’t a bank and instead relied on banking partners, according to a March 2021 settlement agreement. Chime was not fined over that incident.
This story was originally featured on Fortune.com
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