What customers should know about ‘neo-banks’ like Chime

Chime and other online companies now called “neo-banks” became extremely popular during the pandemic as people looked for accounts where they could have their stimulus payments deposited.

But Chime is not actually a bank. It hands over the banking aspect to Bancorp and Stride bank.

KPRC 2 Investigates found when customers have issues with their accounts they say Chime is slow to respond and eager to take their money.

Houston customers lose thousands of dollars

Belinda Mellen and her husband say they are good with their money. They searched for a high-interest savings account to let their IRS refund grow. They found Chime with .5-percent interest and opened an account. When they got their $8700 dollar tax refund Mellen transferred it from her PNC bank account to her new Chime account.

“One day later, I was told that our account was suspended,” Mellen said.

Chime told her it spotted unusual activity on her account. The app requested evidence of where the money came from.

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“And I had to send certain documents for verification. They asked for a government id. They asked for proof of address. They asked me to explain in a letter the purpose of the transfer. And I did provide all of that,” explains Mellen.

(KPRC 2)

But eight days later when we sat down to interview Mellen, Chime still had her money locked up.

“I just want my money back,” Mellen said.

2nd Houston Chime customer contacts KPRC 2 Investigates for help

Ebanehita Ehikioya discovered someone drained her chime account of $3,000 in January by making three withdrawals from a New York ATM.

“I opened my bank account and I said, ‘Whoa! What just happened?’” said Chime customer Ebanehita Ehikioya.

Ehikioya was in Houston and explained that to Chime.

Sending them receipts from services and purchases she made in Houston during that same time as proof it wasn’t her.

“They just kept saying that they needed more proof and any customer service agent I spoke to said, ‘” What is the proof you need? What more do you need?’” said Ehikioya.

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Three months passed and Chime told her it would not be giving her the money.


Push to make neo-banks follow the law

Lauren Saunders is the Associate Director of the National Consumer Law Center, an organization pushing federal regulators to make neo-banks like Chime comply with the law.

“Under the law, if you dispute an unauthorized charge on your account, the company or bank has 10 days to investigate that- resolve it. And the burden is on the bank to show that a payment is authorized when you say it is unauthorized,” said Saunders.

We discovered the Consumer Financial Protection Bureau has received more than 2,200+ complaints about Chime since 2020. Many complaints are about frozen accounts and fraudulent transactions chime wouldn’t reverse.

“If they need more than 10 days, then they need to give you your money back in the meantime and then they can take another 45 days,” said Saunders.

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Both Mellen and Ehikioya received their money within 24 hours of our email to chime. And they both plan to quickly move it elsewhere.

“I’m not gonna keep my money with Chime. That’s for sure,” said Mellen.

“Absolutely not, and I would urge others not to as well,” said Ehikioya.

Chime is not the only neobank out there. So if you do decide to open an account with one of these non-banking banking apps just know there are a large number of complaints against them from unhappy customers.

How to file a complaint against banking app

You can file a complaint against Chime or any other neo-bank or financial service business with the government’s Consumer Finance group.

By email, a Chime spokesperson told us it takes these claims very seriously and follows industry best practices to keep members’ accounts safe.

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KPRC 2 Investigates customer complaints about the CHIME banking app. (Copyright 2020 by KPRC Click2Houston – All rights reserved.)

Here is the full statement from Chime:

“Please be assured Chime takes matters like this very seriously and our member services team has worked quickly to investigate and fully resolve these claims.

When identifying or responding to suspicious activity claims, Chime follows industry best practices in underwriting, risk mitigation, and compliance to keep our members’ accounts safe, which is why we’ve devoted 20% of our workforce to these critical functions.

With regard to Ebanehita Ehikioya the dispute claim in question was reviewed by our independent audit team following your inquiry. Following this process, we have overturned the original decision. The matter has been fully resolved and the member has been given full access to her funds and was notified by a member of our team on March 24th. We are dedicated to doing right by our member community, and we are equally dedicated to fighting financial crime and fraud.

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When looking at cases involving temporary account suspension, like in the case of Belinda Mellen, we follow industry standard best practices in verifying the source of deposits over a certain dollar amount. Once ownership of an account is confirmed, suspensions are lifted and members are given full access to their funds. These verifications are put in place to prevent fraud and ensure Chime remains compliant with federal regulations. Belinda enrolled on March 8th and the account was immediately suspended for fraud. The data and facts surrounding the member’s account transaction history support this decision. Belinda began sending the requested documentation to support on March 10th and 12th. The account was re-enabled on March 14th, within the allotted time frame, which is two business days.

When opening a Chime account, personal information, such as street address, phone number, social security number and email address, is used to verify the member’s identity. Should an account be opened fraudulently our member services team works quickly to close the previously flagged account with proper verification to confirm the identity of the account owner.”

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Chime Spokesperson

Copyright 2022 by KPRC Click2Houston – All rights reserved.

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