Fintech companies that offer online banking services can be dangerous and cause users to lose their money, Sen. Sherrod Brown (D-Ohio), chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, warned in an interview with Business Insider.
“Consumers shouldn't be getting locked out of their accounts, leaving them with no way to access their money to buy groceries, pay their bills, or make rent.”
In July last year, Brown had written a letter to the Consumer Financial Protection Bureau (CFPB) on behalf of the Senate committee, requesting an investigation into fintech firms offering digital banking services, also known as neobanks. The letter specifically asked CFPB to investigate complaints against neobank Chime after several customers reported getting locked out of their accounts.
The neobank would lock customers out of the app, insisting that the bank had identified unusual activity. Many customers never got back the money deposited with Chime. CFPB has received over 2,267 consumer complaints against the digital bank since 2020.
“The CFPB’s mission is to protect consumers from risks in the marketplace for consumer financial products and services. This includes the risks associated with receiving financial services from nonbanks.”
“Ultimately, the core intention of regulatory bodies is to ensure financial stability, safe transactions, and also general consumer protection, and this is really challenged in this uncharted arena that naturally opposes those traditional structures,” Long said.