J.D. Power Sues Chime Over Marketing
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J.D. Power is suing Chime over its recent marketing campaign, arguing that the data does not support the bank's advertising claims. Citi stopped accepting applications for its Custom Cash Card. We are also tracking new ways to borrow, with Experian launching a loan shopping tool directly inside ChatGPT and Pagaya expanding its point-of-sale loans alongside Upgrade. Plus, we look at how the CFPB worked with Bilt to make sure consumers were refunded for fees caused by a recent bank transition.
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J.D. Power Sues Chime Over Marketing Campaign
J.D. Power sued Chime on June 2 in federal court in New York over Chime’s “America’s #1 Choice for Banking” campaign and the line backing it up: “#1 ranking based on J.D. Power survey.” The complaint covers breach of contract, trademark infringement, and false advertising.
The whole fight is about whether the data says what the ad says. Chime says the claim is supported by publicly available J.D. Power data showing it had more new checking account openings than any other listed institution. J.D. Power says that study just tracks new account openings by category, not overall preference or who’s anyone’s primary bank, and that Chime led only in checking, with about half of those openings being secondary accounts. Chime is fighting it, calling the complaint selective and incomplete and saying it’ll defend vigorously, pointing to other accolades like Time’s #1 banking brand.
A few things worth chewing on if you do fintech marketing:
One strong category metric isn’t a market-wide superiority claim. The space between “most new checking accounts” and “America’s #1 Choice for Banking” is basically the lawsuit.
There’s a difference between public data and licensed-for-advertising data. J.D. Power runs a paid licensing program and says Chime’s deal was internal-use-only. That contract question is the sleeper issue here.
Can a footnote save a headline? J.D. Power argues the disclosure contradicted the claim rather than qualifying it.
Claims travel. The same line showed up on the homepage, in paid social, in SEC earnings materials, and in a trademark filing. Each surface is its own exposure.
How will courts assess willfulness? Chime allegedly kept going after a cease-and-desist, and that could unlock bigger damages. (And at time of publication, Chime hasn’t changed their website).
Early days; Chime hasn’t formally answered yet and nothing’s been tested. But it’s a good one to watch for how hard ratings firms will push back on “#1” claims built on their numbers. [ American Banker][US District Court, Southern District of New York]
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Experian Brings Personal Loan Shopping to ChatGPT with New AI-Powered Experience
Experian launched a new personal loan shopping application inside OpenAI's ChatGPT platform, combining conversational tech with its marketplace data to streamline how consumers explore borrowing options through the credit reporting and financial services giant. Instead of forcing users to hop across multiple websites, this tool lets people chat their way to finding a loan. The application pulls criteria from a network of partners to simplify debt consolidation or major purchases. Lending partners like Avant expect the setup to connect users with personalized options in a far more accessible way. To lock down specific rates, users can hop from the chat window over to Experian’s main site to view pre-qualified offers without hurting their credit score. This rollout expands the firm's push to deploy financial tools at "scale", adding to an AI roster that already includes integrations on Snapchat. [Experian]
Pagaya Builds on Multi-Year Partnership with Upgrade to Expand Point-of-Sale Loans
Pagaya is teaming up once again with Upgrade. This expanded partnership is notable given the fact that the duo moves beyond basic personal loans and tackles the buy now, pay later world. Upgrade plans to plug Pagaya’s AI credit decisioning brains right into Flex Pay, its point of sale payment solution. This setup lets the companies offer flexible monthly payments to a "broader" range of shoppers right when they hit the checkout button. They plan to kick things off in the travel sector, a space where Flex Pay already partners with "thousands" of top brands. By using real time underwriting, Pagaya gives Upgrade the power to greenlight more customers quickly and responsibly. Both teams clearly want to help people make thoughtful purchases without stressing over upfront costs. [Business Wire]
Citi Surprises Cardholders by Halting Custom Cash Credit Card
Citi just surprised cash-back fans by halting new applications for its popular Custom Cash Card. For nearly five years, this card automatically helped users with up to 5% cash back on their highest monthly spending category, capping the premium perk at a $500 limit. Instead of releasing a formal public announcement, the bank simply replaced the card's product page with a brief redirection notice. Internal rumors leaked right before the shutdown, but the sudden move still caught eager applicants completely off guard. While existing cardholders can keep using their benefits for now, Citi currently funnels new shoppers toward its alternative Double Cash card. This unexpected shift leaves people wondering if the financial heavyweight plans to force product transfers down the road. [The Street]
In Case You Missed It (Weekly News Pod)
We've been writing about Cash Flow Underwriting lately. On this News Pod, we expand on what we wrote in last week’s in newsletter: Did ChatGPT Just Fix The Cash Flow Underwriting Distribution Problem?
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The CFPB Works To Ensure Bilt Consumers Are Made Whole
The CFPB stepped in to make sure users of Bilt avoided financial headaches during the company's recent bank transition. A bumpy handoff to a new banking partner triggered technical glitches and annoying fees for a "limited" number of accounts. Instead of launching a slow, multi-year investigation, the watchdog group worked directly with corporate leadership to clean up the mess efficiently. Bilt proactively offered to cover any surprise overdraft or late fees tied to the digital shakeup. Recent documentation indicates that the fintech firm successfully resolved the technical bugs and got its platform back on track. The team expects to return cash to more than 500 newly identified consumers following the agency's push. Government officials will continue monitoring the cleanup until the company delivers full financial redress to every single impacted user. [CFPB]
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