CFBP Imposes A $1.5 Million Penalty Against CFPB
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The Consumer Financial Protection Bureau (CFPB) has taken action against Chime for misleading customers about Sendwave’s speed and cost of remittance transfers.
The regulator said that Chime illegally forced consumers to waive legal rights. It also failed to give disclosures and receipts to consumers. The platform also had inadequacies in investigating consumer errors and disputes.
Sendwave Fined $1.5M
The CFPB requires Chime to refund nearly $1.5 million worth of fees to the affected customers. The company will also pay a $1.5 million penalty to the victims relief fund owned by CFPB.
The CFBP Director, Rohit Chopra, said Sendwave tricked its customers, adding that the regulator monitored companies to ensure they abide by the competition laws.
“Sendwave put illegal fine print into their contracts and tricked people who were sending money to their family overseas. The CFPB is carefully watching companies launching mobile payment transfer apps seeking to gain an unfair advantage over their law-abiding competitors,” Chopra said.
Chime, which operates as Sendwave, is a non-banking fintech firm that is a wholly owned subsidiary of WorldRemit. The fintech posted nearly $400M worth of revenues in 2021.
The Sendwave allows consumers to send money across Africa and Asia. The recipients get remittance transfers through a mobile wallet, bank account, or in-person cash pick-up.
Chime Culpable Of Multiple Violations
The CFPB said Chime violated the Electronic Fund Transfer Act and the CFPB Remittance Transfer Rule.
It noted that Chime forced consumers to waive legal protections. Sendwave users were forced to sign a “remittance service agreement” protecting Chime from being liable for any losses suffered by consumers through the Sendwave app.
Chime also lied to consumers that Sendwave remittance transfers are instant. However, in most cases, these transfers took longer. Chime also made false representations on how much it costs to send money from the US to Nigeria, saying that such transfers would not incur any fees.
The fintech also failed to provide the necessary disclosures to consumers. It further failed to track, investigate, and resolve issues. Chime also did not provide receipts promptly. Regulatory guidelines require that remittance firms provide a receipt to consumers within a single business day of payment.
Chime would wait until the funds are delivered electronically to a recipient before a receipt is issued. In some cases, the process will take more than one business day.
