The Consumer Financial Protection Bureau yesterday entered into a consent order with a fintech company that operates a remittance transfer app that will see the company pay $3 million in fines and refunds to customers after it was accused of forcing customers to waive their legal rights, failing to provide required disclosures, and failing to properly investigate disputes and errors.
A copy of the consent order with Chime Inc. can be accessed by clicking here.
Chime operates an app called Sendwave that allows consumers to send money internationally, primarily to countries in Africa and Asia. The transfers are made to the recipient’s mobile wallet or bank account or can be picked up at various in-person locations.
The company required users of the app to agree to a remittance services agreement that limited Chime’s liability for damages to $1,000 and protected Chime from losses the consumer may incur through use of the app. Both of these provisions are illegal under the Electronic Funds Transfer Act. The company also marketed that transfers could be made “instantly” or “in 30 seconds” or “within second” when, in many cases, the process took “much longer,” according to the CFPB. The company also failed to accurately disclose the date by which funds would become available, did not have proper policies and procedures in place to find and track remittance errors nor did it conduct investigations when it was notified of errors, and failed to provide receipts within one business day of payment, which is required under the Remittance Transfer Rule.
“Sendwave put illegal fine print into their contracts and tricked people who were sending money to their family overseas,” said CFPB Director Rohit Chopra. “The CFPB is carefully watching companies launching mobile payment transfer apps seeking to gain an unfair advantage over their law-abiding competitors.”
The company will refund consumers $1.5 million and pay a fine of the same amount.
