Chime to stop calling itself a ‘bank’ to settle legal action
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US-based neobank Chime will no longer refer to itself as a bank after it agreed to a
settlement with the California Department of Financial Protection and Innovation. The regulator took action against the US neobank in 2020 because it doesn’t have a state banking license. The settlement calls for Chime to add clarifications about its operations to its website and advertising by May 15. Moving forward, Chime will state that it is a fintech and that it partners with outside banks to provide its offerings.
Some of the neobank’s licensed competitors argue that their licensing helps bolster their reputations, which would also come with the ability to offer deposit products without needing to partner or share revenues with a sponsor bank. Green Dot CEO Dan Henry
Dive Brief:
The California Department of Financial Protection and Innovation has ordered challenger bank Chime to cease and desist language the regulator says falsely portrays the fintech as a bank, according to a settlement agreement reached March 29.
The San Francisco-based company has been the subject of a yearlong investigation by the California regulator for using chimebank.com as its web address prior to February 2020, and for using the terms bank or banking in its business.
Chime, which does not have a banking license, has cooperated with the investigation, and has neither admitted nor denied any wrongdoing, according to the settlement.
The California Department of Financial Protection and Innovation
a consent order with Lambda, Inc., which does business as Lambda School, to settle the DFPI’s claims that a provision in Lambda’s student financing contracts was misleading. The consent order also resolves the DFPI’s claim that Lambda’s marketing materials were misleading. The DFPI’s claims were brought under the new
California Consumer Financial Protection Law, which took effect on January 1, 2021 and prohibits providers of financial products and services from engaging in unfair, deceptive, or abusive acts or practices.
According to the consent order, Lambda offers California students the option of financing the cost of attending its online computer coding school through a contract in which the student agrees to pay Lambda a percentage of the student’s future income up to a specified amount (Contract). (Lambda offers California students the option to defer tuition through
Debt collector licenses are required beginning on January 1, 2022 but a debt collector that applies for a license before that date can continue to operate while the application is pending. In its
Notice of Rulemaking Action, the DFPI states that it anticipates that final rules will become effective on or about November 19, 2021, thereby allowing debt collectors to apply for a license before January 1, 2022.
Specifically, the DFPI is proposing to add the following sections to subchapter 11.3 of title 10 of the California Code of Regulations setting forth the requirements for obtaining a debt collection license under the DCLA:
Section 1850 – Defines terms used in the regulations.
CA DFPI Announces Members of New Debt Collection Advisory Committee Published on: 30 April 2021 at 08:00 a.m. ET April 30, 2021, 8 a.m. May 3, 2021, 9:40 a.m. insideARM.com The iA Institute
http://www.insidearm.com/news/00047318-ca-dfpi-announces-members-new-debt-collec/
SACRAMENTO, Calif. The California Department of Financial Protection and Innovation (DFPI) today announced the formal creation of its inaugural debt collection advisory committee, a seven-member board that will provide critical feedback to the Department as it stands up its debt collection licensing program. The diverse group includes a consumer advocate and representatives from the debt collection, debt-buying, third-party collection, and collection law industries.
The committee members represent a cross-section of interested candidates; five are industry representatives, one is a consumer advocate, and one is a law and economics professor who studies the industry.