Chime has been forced to ditch the use of the word “bank” in describing its services as it is not properly licensed, a court filing for a settlement agreement with the California Department of Financial Protection and Innovation stated.
Instead, Chime is a FinTech working with banking partners to provide consumer-oriented banking products. Under the cease-and-desist order, Chime will have to stop using the term until it is “licensed or otherwise authorized to engage in the business of banking” under California’s laws, the agreement stated.
Chime has agreed to perform a review of its website and other operations this month, according to the agreement. In addition, the company has agreed to stop using the word “banking” and derivatives through clarifying statements on its site, including a disclosure stating that Chime is not technically a bank.
The company will also undergo internal review intended for times when Chime presents testimonials when it “may be perceived as representing Chime as a bank,” the agreement stated. The company will now have to clarify in any testimonials it publishes that Chime is actually a FinTech and not a bank. It will have to make revisions of that kind on its website and on paid Google search results.
And, the company will have to include a section in its Frequently Asked Questions (FAQ) segment about the clarification of what type of company it is, according to the agreement.
Chime will have to put in place testing policies and procedures to comply with the rules. And it will have to submit a report on its compliance on June 15 and again the following year, the agreement stated.
Chime has seen success, with recent reports showing that it could reach a valuation of $30 billion if it goes public. And that could happen before the end of the year.
CEO Chris Britt said last year that Chime is beyond the point of needing to raise capital. He didn’t say there would be an initial public offering (IPO), but he said the company has “every intention of being a large, independent public company.”
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