Audio By Carbonatix
Editor’s Note 10/12/2023, 1:37 p.m.: This article has been updated to include new information from Philip R. regarding Cash App’s response to his claim.
Miami resident Philip R. decided late last month to visit the much-buzzed-about Komodo restaurant and lounge in Deep Ellum. The next thing he knew, he said, someone had stolen his phone and money-clip wallet.
Within a matter of hours, Philip’s savings were drained from his account on Chime, a financial tech app.
Philip, who asked that his last name be withheld to protect his identity, had come to Dallas for a consulting job. He claims he’s now stuck in North Texas because Chime refuses to make him whole for the more than $6,500 that was stolen.
Philip told the Observer last week that he’s virtually penniless and nearly homeless. He said that whoever took his phone used it to ask for money from his loved ones, some of whom obliged thinking that the funds would go to Philip.
“I can’t even turn to family and friends,” he said. “It’s not like they’re mad at me, but they’re not going to go help me out because they already got burned.”
Some may assume that Chime is a bank, but technically it is not. Rather, the company partners with banks to provide its users with early paydays and online banking services, and to assist in boosting credit.
“I’ve been victimized twice, right?” he said. “I’ve been pickpocketed and now I’m being victimized by Chime, who I thought was a bank, and they don’t do what’s right. And, you know, I’m desperate.”
Following the theft, Philip filed a report with the Dallas Police Department, which the Observer has reviewed. But he explained that the report was returned and later rejected after he was asked to sign an affidavit at the station downtown – something he says he was unable to do because he lacked funds to take an Uber from where he was staying in Plano.
The Observer also reviewed screenshots of Philip’s Chime records, his communications with the company and other relevant documentation.
Chime investigated but chose to close Philip’s case.
“We are aware of these claims and shared our review with the member when we were contacted last month,” a company representative told the Observer via email. “We’ve found that the claims are without merit and properly denied.”
Cash App, on the other hand, which was also used by the perpetrator to steal money from Philip, reimbursed a portion of what he lost on Tuesday, Oct. 10.
Chime Customers Complain of Fraudulent Charges, With Some Seeing ‘a Pattern’
Stories of similar incidents have cropped up nationwide.
In May, FOX 26 in Houston reported that a nurse’s Chime account had been drained. Although she had tried for months to get reimbursed for the $1,000 she’d lost, the company promptly credited her account after the station got involved.
That same month, a FOX affiliate in Salt Lake City aired a piece about a woman who’d lost nearly $10,000 from her Chime account because of fraudulent charges. She also eventually saw that money returned, but only after the outlet looked into the story.
Philip pointed the Observer to a CBS article published in August detailing a Chicago teacher’s unpleasant experience with the company. Her vacation to Italy had reportedly been “ruined” after $1,200 was swiped from her Chime account. Yet again, the disputes she filed were initially denied, but her money was eventually returned after she reached out to the media.
“This is my life savings, and it’s wrong what happened here,” Philip said. “It’s clearly a pattern with Chime.”
“Consumers need to understand that sometimes they’re trading convenience for protections.” – Carla Sanchez-Adams, NCLC Senior Attorney
Consumer Advocates on the Problem: ‘Not Unique’
Chime has faced thousands of customer complaints filed through the Better Business Bureau. More than 7,970 such complaints have been closed over the past three years. By contrast, Wells Fargo – which doesn’t exactly enjoy widespread customer satisfaction – has generated around 5,590 complaints within the same timeframe.
Fintech apps have become more popular in recent years, said Christine Hines, legislative director at the National Association of Consumer Advocates. Such companies don’t face the same responsibilities and regulations as banks, even though they operate in a similar way.
Hines said changes are needed at the state and federal levels to hold fintech more accountable.
“Right now, it doesn’t appear that there’s really much in the way of protecting consumers – their users – from fraud and errors,” Hines said. She added that while situations like Philip’s are unfortunate, they definitely are “not unique.
“It is happening,” she continued, “and we’re hoping that more will be done to protect consumers who are using these apps, which is millions of people.”
During the pandemic, many folks sought to use Chime to help boost their credit, according to the online consumer rights service FairShake. However, they also “didn’t get the same fraud liability protection without the same protections as a bank.”
FairShake advises those who feel that they’ve been burned by Chime to explore legal options.
“You can file a complaint against Chime,” FairShake states on its website. “You can try to sue Chime in small court, even if you can’t join lawsuits against them. Alternatively, you can use consumer arbitration.”
Victims of fraudulent account activity do have rights, said Carla Sanchez-Adams, senior attorney at the National Consumer Law Center. In such cases, “time is of the essence.”
If you find yourself in a scenario where your wallet has been stolen, Sanchez-Adams advises you to immediately report it to your bank and dispute any unauthorized charges. Be sure to do it as soon as you can.
Sanchez-Adams advises people to educate themselves on the risks of using fintech apps like Chime.
“Consumers need to understand that sometimes they’re trading convenience for protections, and just be aware of that trade-off when they make a decision,” she said. “Because I don’t think consumers always know pros and cons to different products that exist.”
