The Consumer Financial Protection Bureau (CFPB) ordered Chime Financial to pay $3.25 million in penalties for allegedly delaying consumer refunds past its promised 14-day timeframe.

Chime agreed to pay at least $1.3 million in redress to harmed consumers in reaching settlement, the CFPB announced in a press release Tuesday.

The financial technology company further agreed to implement a compliance plan; provide compliance progress reports; and update its board and chief executive on compliance obligations, including reporting, recordkeeping, and monitoring requirements, according to its consent order.

The details: Chime designed and serviced consumer banking accounts for two separate Federal Deposit Insurance Corporation-insured “partner banks,” with responsibilities to provide customer service on consumer accounts, the CFPB said.

Chime’s policy is to automatically refund balances over $1 within 14 days upon account closure, but the company failed to issue refunds in thousands of instances within 90 days, the CFPB alleged.

In an emailed statement, a Chime spokesperson said most of the delayed refunds were caused by a “configuration error with a third-party vendor” between 2020-21. Upon discovery of the error, the company worked with the vendor to resolve the issue and issue refunds to impacted consumers, per the statement.

Compliance considerations: The company agreed to create and implement a comprehensive compliance plan within 60 days that includes detailed steps for achieving compliance with the order, a mechanism to ensure the board is kept apprised of the status of compliance actions, and specific timeframes and deadlines.

The company further agreed to recordkeeping obligations that include all documents and records be “maintained in their original electronic format” and data be centralized and maintained in a way that “access, retrieval, auditing, and production are not hindered,” per the order.

Company response: “Our settlement agreement with the CFPB reflects our belief that the timely handling of customer matters is critical, even amid the pandemic’s unique challenges,” the statement read. “… We share the bureau’s goal to create a more competitive and accessible financial landscape that is good for everyday consumers. We look forward to continuing in this mission and are pleased to have resolved this matter.”

Jeff Dale is Managing Editor, Editorial Projects and Analytics, at Compliance Week. He previously served as Compliance Week's Digital Editor and has worked as a copy editor at the Boston Herald and city editor at The Hour Publishing Co. in Norwalk, Conn.View full Profile

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