Chime Inc. Faces CFPB Action for Alleged Deceptive Practices on Sendwave App

The Consumer Financial Protection Bureau (CFPB) has taken action against Chime Inc., the operator of the Sendwave mobile app, for deceiving consumers about the speed and cost of remittance transfers.

Chime Inc. is not connected to the California-based FinTech Chime Financial.

Chime Inc. has also been found guilty of illegally forcing consumers to waive their legal rights, failing to provide required disclosures and receipts, and neglecting to properly investigate consumer disputes and errors, according to a CFPB press release Tuesday (Oct. 17).

As a result, the CFPB has ordered Chime Inc. to refund affected consumers nearly $1.5 million in fees and pay a $1.5 million penalty into the CFPB’s victims relief fund.

Chime Inc. is a nonbank FinTech company and its Sendwave app allows consumers to send money internationally, primarily to countries in Africa and Asia. However, the CFPB’s investigation found that Chime Inc. violated the Electronic Fund Transfer Act and the CFPB’s Remittance Transfer Rule in several ways.

First, Chime Inc. forced consumers to waive their legal protections. Users of the Sendwave app were required to sign a “remittance services agreement” that absolved Chime Inc. of responsibility for any losses incurred through the app. Additionally, Chime Inc. limited its liability for damages to $1,000, which is a violation of consumer rights under the Electronic Fund Transfer Act.

Furthermore, Chime Inc. made false promises about the speed and cost of remittance transfers. Through deceptive marketing on social media platforms, Chime Inc. claimed that Sendwave transfers would be delivered “instantly” or within seconds, when in reality, many transfers took much longer. Chime Inc. also misrepresented the cost of sending money to Nigeria, stating that there would be “no fees” when consumers were actually charged fees.

Chime Inc. also failed to provide required disclosures and receipts. The company did not accurately disclose the availability of funds to recipients and misrepresented exchange rates. Additionally, Chime Inc. did not have proper policies and procedures in place to track, investigate, and resolve errors in remittance transfers. The company also failed to provide receipts in a timely manner, violating the Remittance Transfer Rule.

The CFPB order requires Chime Inc. to refund fees to affected consumers who sent remittance transfers from the United States to Nigeria during the time Chime Inc. deceptively marketed its transfers as fee-free. Chime Inc. must also refund any fees consumers paid when the Sendwave app failed to deliver funds to the designated recipient by the promised date.

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