The operator of remittance app Sendwave, Chime, recently received a major $1.5 million penalty from the Consumer Financial Protection Bureau, which accused the firm of deceiving customers.
According to the CFPB, Chime has deceived users about the cost and speed of international transfers, which led them to paying much higher fees than they were expecting. In addition to paying the hefty fine, Chime — unrelated to Chime Financial — was also ordered to refund affected customers, which will cost the company another $1.5 million.
Chime’s marketing campaigns offered false promises
Chime is a company that operates Sendwave — an app that allows users to send money internationally, which was primarily used for remittances. The app has seen a lot of use by those who need to send money to African and Asian nations. Meanwhile, recipients receive the transfers by delivery to their bank account, mobile wallet, or cash, which they can pick up in person.
However, according to CFPB, Chime’s marketing campaigns on social media suggested that consumers using Sendwave for remittance transfers would see deliveries “instantly,” “in 30 seconds,” as well as “within seconds.”
These claims were false, according to the Bureau, which also noted that Chime told customers that remittances from US to Nigeria would come with no fees. However, those who used the app to send money to Nigeria were still charged transaction fees.
Furthermore, Sendwave users had to sign a remittance services agreement, which granted Chime protection from being responsible for any losses that consumers may suffer while using the app.
Sendwave users tricked into paying more for sending money
CFPB Director Rohit Chopra stated that Sendwave used the legal fine print in the contracts to protect itself from its own customers, who were tricked while sending money to their families in struggling economies.
“The CFPB is carefully watching companies launching mobile payment transfer apps seeking to gain an unfair advantage over their law-abiding competitors,” Chopra added.
Chime is owned by WorldRemit, which acquired it three years earlier, in 2020. The two businesses were later put under the same umbrella of a new entity — a company named Zepz. Last year, in 2022, the company was also trying to go public in the US, with its value estimated to be at around $6 billion. However, the plans were shelved due to accounting difficulties in checking and verifying accounts.
Now, however, the new controversy will likely act as yet another challenge on the road to reaching this goal, if Chime decides to continue pursuing it in the future.