Banking app closes woman’s account, freezing money needed to pay bills

By Stacey Cameron

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    NASHVILLE, Tennessee (WSMV) — Two years ago, Tia Pugh was thinking about buying a house but realized she needed to improve her credit before applying for a loan. So, a friend suggested she download the Chime app, open an account and start using Chime’s Credit Builder credit card to pay bills and improve her FICO score.

“If your friend uses something, and you trust your friend, you’re going to be like, ‘yeah, why wouldn’t you trust it?’” Pugh said.

Pugh opened her account, and she says had no problems transferring money, paying bills, and making purchases with her credit card until March of this year. That is when she transferred $1,500 into her Chime account from her personal bank account with First Horizon. Emails Pugh shared with WSMV show Chime flagged the deposit, saying it was “unusual activity” and suspended the account.

“Unusual activity, there’s not unusual activity,” Pugh said. “I have done this many times before. Maybe it wasn’t this amount, but I have transferred money from my local bank to my CHIME account with no problems.”

Nearly a month later, Pugh says she still cannot access the funds in her Chime account, money she says is needed to pay bills now coming due.

“I was paying my phone bill, my insurance bill, some credit card bills,” Pugh said.

Chime is not a bank in the traditional sense. Instead, it is a digital only company, often referred to as a neobank or fintech, that offers all-in-one banking services through a user-friendly mobile app. As Chime boasts in the company’s online promotional materials, accounts can be set up in minutes, no credit check is required, and for people setting up direct deposit, certain deposits are accessible two days early.

Those features have helped the company become the largest neobank in the United States, with more than 12 million customers, according to Ted Rossman, a senior industry analyst with Bank Rate.

“These [neobanks] are kind of trendy new things that have kind of emerged as kind of part of the app craze that you know especially caters Gen Zers and younger millennials,” Rossman said. “Remember a few years back there was this whole anti-bank sentiment around Occupy Wall-Street? And so you know the messaging about Chime and companies like it tends to be this kinder, gentler financial institution.”

Pugh made the flagged deposit on March 9, and the following day she received an email from Chime, mandating she take a series of steps to verify her identity, verify the origin of the deposit in question and the purpose of that deposit.

“They want me to send a picture, holding my ID beside my face. They want me to send a picture with a piece of paper showing the date, and send a picture of my social security card,” Pugh said. “I did everything.”

In fact, Pugh claims she forwarded the information to Chime more than once and even tried calling the company’s customer service number, only to be told another department handled suspended accounts, according to Pugh.

“I wouldn’t say it’s typical for a bank to be asking you these types of questions about like where the money’s coming from or how you want to use it,” Rossman said. “Maybe this is getting snagged by fraud policy.

WSMV4 reached out to Chime, to ask about Pugh’s account. A company spokesperson confirmed that Chime’s member services had been in touch with Pugh, but the company could not share additional information or specifics about Pugh’s account.

Rossman says Chime has developed a good reputation in the digital banking space, especially for its simplicity and services offered. But with all neobanks, Rossman says there is a tradeoff when it comes to customer service when compared to brick-and-mortar banks, and that is customer service. With neobanks like Chime, Rossman says if problems pop up with your account, you cannot walk into a neighborhood branch, talk to a teller, and iron the issue out.

“I know it can be frustrating, and honestly, that should probably be part of the calculation when you’re determining where to keep your money,” Rossman said.

Rossman suggests neobank customers facing issues like Pugh, who cannot resolve their issues through a neobanks customer service, file a complaint with federal banking authorities, like the Consumer Financial Protection Bureau.

The CFPB’s complaint database, that’s actually pretty good at getting responses from financial institutions,” Rossman said.

A search of the Consumer Financial Protection Bureau’s database reveals Pugh isn’t alone. WSMV uncovered 145 complaints, where customers claim CHIME suspended or closed accounts, under circumstances like Pugh. One customer claimed he set up direct deposit, only to have Chime suspend his account following a $1,100 deposit from his employer. Another Chime customer complained his account after a $790 SSI deposit.

In an emailed statement sent to WSMV4 investigates a Chime spokesperson wrote:

“The trust of our members is fundamental to our business and Chime’s number one priority. Our best-in-class customer service team works every day to help our members succeed, and we strive to make it as easy as possible for them to get the account support they need. To ensure the safety of our members and our platform we employ rigorous fraud detection protocols, taking action when necessary to prevent fraudulent activity. We recognize this process can result in inconvenience to impacted members. We are always looking for ways to provide better member experiences, including resolving account inquiries, like this one, more efficiently. Customers can reach out to Chime’s live support 24/7, 365 with questions.”

Most of cases that WSMV4 uncovered against Chime in the CFPB database were resolved, although it is unsure if customers got all their funds back and how soon. But that news provides little comfort to Pugh, who says she feels certain her money is already gone.

“I don’t know what I’m going to do honestly, I don’t,” Pugh said. “I could have just gone outside and threw it in the air if I knew they were just going to take it like this.”

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