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Like all "tech" companies - they're selling your data. They already do it in their brokerage accounts. Now imagine the value of knowing what you spend every
by elliekelly 8y ago
Like all "tech" companies - they're selling your data. They already do it in their brokerage accounts. Now imagine the value of knowing what you spend every single dollar on, how often you're shopping at a competitor, what time of day you're most likely to swipe your card, etc.
They're SIPC insured (like a brokerge account) instead of FDIC insured (like a bank account) which is a subtle difference and ever-so-slightly riskier for the consumer but not terribly different.[1] The biggest/riskiest difference is that the insurance here is provided by a group-funded non-profit as opposed to the federal government.
But mostly it's about making up the difference with your data.
[1]https://www.schwabmoneywise.com/public/moneywise/essentials/understanding_fdic_and_sipc_insurance https://www.schwabmoneywise.com/public/moneywise/essentials/...
- soared 8y agoAll your credit card companies do the same.
- elliekelly 8y agoNot like this. American Express might have paid marketing "partnerships" but Robinhood is taking it the next level. The Gramm-Leach-Bliley Act requires "financial institutions" to give customers the opportunity to opt-out of information sharing with third-parties. GLBA doesn't permit customers to opt-out of information sharing with affiliates. Tucked on the second page of Robinhood's privacy notice[1] (which is curiously absent from their "disclosures" webpage) you'll see they have an affiliate "Chronos Research." [1]https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal/RHF%20Privacy%20and%20Security.pdf https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal...
- soared 8y agoI mean I guess if you opt out its different, but visa/mastercard etc by default sell all your data. Here is just a tiny amount of the data I can buy/use. https://imgur.com/a/VCUoIRW https://imgur.com/a/VCUoIRW
- jldugger 8y ago> Now imagine the value of knowing what you spend every single dollar on, how often you're shopping at a competitor, what time of day you're most likely to swipe your card, etc. I'm curious what the harm here is. Are they going to blackmail people who shop at their competitors?
- elliekelly 8y agoIt's basically Facebook on steroids in terms of how much information they're going to have on their users. And, unlike Facebook, this "free" platform self-selects only the most valuable users (for marketing purposes): those with disposable income.
- laken 8y agoWhile that's a possible money source for sure, Robinhood currently makes their profit on their brokerage accounts mostly by earning interest on deposited cash. Banks make boatloads of money without needing to sell data, but rather selling loans. Not even needing to loan money, offering 3% interest, with how high treasury notes are these days, is _really_ easy for banks to do. The problem is that generally banks also have really high overhead, something Robinhood doesn't.
- criddell 8y agoWith 3% interest, that would be where I park money. What information will they get from me other than I dumped $ in and it's sitting there?
- jldugger 8y agoWhy have two checking accounts?
- Benji_San 8y agoWhy not? It doesn't cost anything extra except some time for the initial setup and you get a guaranteed short term return on your parked money.
- jldugger 8y agoBut why not just close the old account? You'll get that short term return for all your checking float in that case.
- criddell 8y agoBecause one is from a bank with a high interest rate but a shitty privacy policy and the other is from a bank with a better privacy policy but a lower interest rate.
- thedeepself 8y agoyou are getting 3% interest in paper money which has hidden inflation rate of ...? better to buy gold/silver/real estate IMHO.