Flores v. Chime Financial, Inc.

Background

Delia Flores sued Chime Financial, Inc., formerly known as 1Debit, Inc., and The Bancorp Bank. She alleged violations of the Electronic Funds Transfer Act and the New York General Business Law based on unauthorized charges that her nephew allegedly made to her Chime spending account in December 2020. Flores alleged that she disputed the charges but that Chime did not credit the money back to her account.

The defendants moved to compel arbitration and stay the federal case. They initially submitted 2021 versions of Chime’s Deposit Account Agreement and User Agreement. Flores argued that those agreements were adopted after she opened and closed her account. In reply, the defendants submitted the March 2019 Deposit Account Agreement and June 2019 Member Agreement, which they stated were in effect when Flores opened her account on February 12, 2020.

Arbitration agreement

The court applied New York law because it found no relevant conflict among New York, Delaware, and California law. Under New York law, a contract requires mutual assent. The court explained that a “clickwrap” agreement—an online agreement requiring a user to click boxes acknowledging terms—can establish assent when the user has reasonable notice of the terms.

The court found that Flores could not have created her Chime account without checking boxes agreeing to the account and member agreements. The agreements were displayed as highlighted hyperlinks next to the check boxes, and the arbitration provisions used bold, capitalized, and otherwise conspicuous language. The court therefore concluded that Flores assented to a valid agreement to arbitrate.

Flores stated that she did not remember which screens appeared during registration or whether she had seen the agreements. The court held that this lack of recollection did not create a factual dispute about assent. Flores also stated that she emailed Chime to opt out of arbitration on August 12, 2021. The court found that the 2019 Member Agreement allowed opting out only within 30 days after acceptance, and that Flores had not shown that she opted out within that period.

The court further noted that Flores did not argue that her claims fell outside the arbitration agreement, that the agreement was unconscionable or otherwise unenforceable, or that the defendants’ evidence failed to establish the agreement’s existence. Because the defendants demonstrated a valid arbitration agreement and Flores did not show that she lacked consent, that the agreement was invalid, or that it did not cover her claims, the court granted the motion to compel arbitration.

Stay and disposition

The Federal Arbitration Act requires a court to stay judicial proceedings involving issues that the parties agreed in writing to arbitrate. Because the court determined that Flores’s action was subject to arbitration, it stayed the case pending arbitration.

Judge Ronnie Abrams granted the defendants’ motion to compel arbitration and to stay further proceedings. The parties were ordered to submit a status letter within one week after arbitration ended, and no later than September 24, 2022. The opinion did not decide whether Flores’s underlying statutory claims were valid.