SAN FRANCISCO–The rapidly growing fintech Chime has been ordered to stop using the word “bank” when describing itself and its services.’
Chime is not licensed to use the word, according to a settlement agreement the company has reached with the California Department of Financial Protection and Innovation.
As part of the cease-and-desist order, Chime must stop using the term until it is “licensed or otherwise authorized to engage in the business of banking” under California’s laws.
Chime, which has seen rapid growth to more than 12-million users in the U.S., also agreed to review of website and other operations for usage of the word “bank” and to further 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 Stipulations
According to the agreement, Chime said it will also perform an internal review intended for times when Chime presents testimonials when it “may be perceived as representing Chime as a bank.”
It is also required to clarify in any testimonials it publishes that Chime is actually a fintech and not a bank. That includes making revisions to its website and on paid Google search results.
In addition, the agreement requires Chime to:
- Include a section in its Frequently Asked Questions (FAQ) segment about the clarification of what type of company it is
- Put in place testing policies and procedures to comply with the rules
- Submit a report on its compliance on June 15 and again the following year in 2022
Reports have indicated the company may seek to go public before year-end and could hit a valuation of $30 billion.