Dive Brief:

• Chime has been the subject of 920 customer complaints filed with the Consumer Financial Protection Bureau (CFPB) since April 15, 2020, almost 200 of which involve customers being locked out of their accounts according to a report published Tuesday by ProPublica.

• Many of the San Francisco-based neobank’s CFPB complaints detail problems with accounts that were closed against customers’ will, the publication reported. 

• Chime said the complaints are related to the fintech’s attempts to crack down on accounts that use fraudulently obtained unemployment insurance or federal stimulus payments. "As a leader in the US payments ecosystem and as part of our commitment to Chime members, we take seriously our responsibility to detect and prevent fraud," Chime spokesperson Gabe Madway said in a statement.

Dive Insight:

"For a company that most people have never heard of, I think that’s a lot of complaints," Lauren Saunders, associate director of the National Consumer Law Center, told ProPublica. 

Wells Fargo, the nation’s fourth-largest bank, by comparison, garnered 317 CFPB complaints related to closed accounts over the same time period, ProPublica noted. Goldman Sachs’ Marcus, with 4 million customers, has seven such complaints.

The assertion that Chime is largely unknown is a matter of perspective. With an estimated 12 million customers, it is the largest challenger bank in the U.S. Its digital banking app was the most downloaded of its kind in the U.S. during the first half of 2021, with 6.4 million installs, according to data collected by Apptopia.

Most of the neobank’s CFPB complaints have been labeled "closed with explanation," a designation that indicates Chime resolved the dispute privately with the account holder. The company is responding to the rest, ProPublica reported. 

Customers have also filed 4,439 complaints against Chime with the Better Business Bureau (BBB). The neobank has said it "takes these issues seriously" and that its "top priority is protecting its members," according to statements on BBB's website.

Many of the complaints are related to government payments for stimulus aid, with many account closures occurring directly after a government deposit, according to ProPublica, which interviewed customers and reviewed the CFPB complaints. 

In an attempt to root out fraud related to the government-backed pandemic aid, the fintech may have inadvertently closed hundreds of legitimate customer accounts, the publication reported.

Chime’s customer complaints have emerged amid a period of remarkable growth for the fintech startup.

Chime, which was founded in 2013 by CEO Chris Britt, closed a fundraising round last year that values the company at $14.5 billion.

Britt said the fintech is also eyeing a public listing, telling CNBC in September it could be "IPO-ready" within the next 12 months.

The company has reportedly been in talks with investment banks about an initial public offering that could value the company at more than $30 billion, Reuters reported in March.

As Chime’s growth has swelled, the platform’s popularity has also caught the attention of regulators looking to crack down on how fintechs market their products to consumers.

The company reached a settlement with the California Department of Financial Protection and Innovation in March in which it was ordered to cease and desist language the regulator says falsely portrays the fintech as a bank.

Chime has cooperated with the investigation and has neither admitted nor denied any wrongdoing, according to the settlement.