Skip to content

Menu

LexBlog, Inc. logo
CommunitySub-MenuPublishersChannelsProductsSub-MenuBlog ProBlog PlusBlog PremierMicrositeSyndication PortalsAboutContactResourcesSubscribeSupport
Join
Search
Close

Chime Financial Cannot Claim it is a Bank

Cybersecurity_1081949892
By Keith J. Barnett, Timothy Butler, Carlin McCrory, Matthew White, Troy Jenkins & James Stevens on May 11, 2021
Email this postTweet this postLike this postShare this post on LinkedIn

The Department of Financial Protection and Innovation (DFPI) of California entered a settlement agreement with Chime Financial, Inc. (Chime), a neobank company that is not licensed to operate as a bank or otherwise exempt from licensure, but works with banking partners to issue consumer banking products. The DFPI found that Chime potentially violated California Financial Code Sections 561 and 563 by (1) using the website “chimebank.com” and (2) using the words “bank” and “banking” in certain other aspects of its business.

As part of the settlement, Chime will stop using the website “chimebank.com” in its business unless and until it becomes a licensed bank. Moreover, Chime is required to perform a review of its webpage and advertising to further clarify any references where the term “banking” is used and bolster its description of its role as a “technology, business processor, and marketing service provider to its Bank Partner(s).” It is required to make any such disclosures in bold and/or increased font size and in close proximity to the banking terminology. Chime must also establish and implement policies and procedures designed to ensure compliance with the settlement agreement and submit a written compliance progress report by June 15.

DFPI Commissioner Manuel Alvarez stated neobank platforms labeling themselves as banks are “deceptive to consumers and it’s unfair to actual banks.” The instant action will likely force other fintechs to remove or add clarifying disclosures to similar “banking” references from their websites and advertisements and ensure their website URLs are not misleading.

Photo of Keith J. Barnett Keith J. Barnett

Keith Barnett is a litigation, investigations (internal and regulatory), and enforcement attorney with more than 15 years of experience representing clients in the financial services and professional liability industries.

Read more about Keith J. BarnettEmailKeith's Linkedin Profile
Photo of Timothy Butler Timothy Butler
EmailTimothy's Linkedin Profile
Photo of Carlin McCrory Carlin McCrory

Carlin is a regulatory, compliance, and payments attorney with experience representing financial institutions, fintechs, lenders, debt collectors, payment processors, neobanks, virtual currency companies, and mortgage servicers.

Read more about Carlin McCroryEmail
Photo of Matthew White Matthew White
Email
Photo of Troy Jenkins Troy Jenkins
EmailTroy's Linkedin Profile
Photo of James Stevens James Stevens

James Stevens provides general corporate and regulatory advice to our clients. James has substantial experience in the representation of public and private companies, including financial institutions, marketplace lenders and other FinTech and financial services companies, in mergers and acquisitions, securities offerings and regulatory…

James Stevens provides general corporate and regulatory advice to our clients. James has substantial experience in the representation of public and private companies, including financial institutions, marketplace lenders and other FinTech and financial services companies, in mergers and acquisitions, securities offerings and regulatory reporting and compliance. He often serves as the principal outside counsel for these clients.

Read more about James StevensEmail
Show more Show less
  • Posted in:
    Financial
  • Blog:
    Consumer Financial Services Law Monitor
  • Organization:
    Troutman Pepper Hamilton Sanders LLP
  • Article: View Original Source

LexBlog, Inc. logo
Facebook LinkedIn Twitter RSS
Real Lawyers
99 Park Row
  • About LexBlog
  • Careers
  • Press
  • Contact LexBlog
  • Privacy Policy
  • Editorial Policy
  • Disclaimer
  • Terms of Service
  • RSS Terms of Service
  • Products
  • Blog Pro
  • Blog Plus
  • Blog Premier
  • Microsite
  • Syndication Portals
  • LexBlog Community
  • 1-800-913-0988
  • Submit a Request
  • Support Center
  • System Status
  • Resource Center

New to the Network

  • Pro Policyholder
  • The Way on FDA
  • Crypto Digest
  • Inside Cybersecurity & Privacy Law
  • La Oficina Legal Ayala Hernández
Copyright © 2022, LexBlog, Inc. All Rights Reserved.
Law blog design & platform by LexBlog LexBlog Logo