13 ms·
FTC to close down mobile banking app Beam
- cycomanic 6y agoGood, now do something about the car maker who advertise autopilots, but to regulators says it's not really an autopilot.
- aaronbrethorst 6y agohttps://www.theverge.com/2021/3/23/22346828/lina-khan-ftc-commissioner-biden-nomination-facebook-google-doj-garland https://www.theverge.com/2021/3/23/22346828/lina-khan-ftc-co...
- ompaLompa 6y ago"An autopilot is a system used to control the trajectory of an aircraft, marine craft or spacecraft without requiring constant manual control by a human operator. Autopilots do not replace human operators. Instead, the autopilot assists the operator's control of the vehicle, allowing the operator to focus on broader aspects of operations (for example, monitoring the trajectory, weather and on-board systems)."
- ahepp 6y agoWebsite hijacks the back swipe on chrome for android
- ignoramous 6y agoThe last paragraph goes: > In other recent banktech and wealthtech news, SoFi will offer its users the ability to invest in IPOs for companies going public, the digital lender announced on Friday. Typically, these opportunities are reserved for institutional investors. SoFi expects to offer a couple of IPO securities in the months ahead that will be available for its "SoFi Invest members through the SoFi app." Well played SoFi.
- ghayes 6y agowhich is why we should actually link to the FTC release, and not blog-spam. [0] [0] https://www.ftc.gov/news-events/press-releases/2021/03/mobile-banking-app-settles-ftc-allegations-it-misled-users-about https://www.ftc.gov/news-events/press-releases/2021/03/mobil...
- jachee 6y agoDirect link to the FTC Press Release: https://www.ftc.gov/news-events/press-releases/2021/03/mobile-banking-app-settles-ftc-allegations-it-misled-users-about https://www.ftc.gov/news-events/press-releases/2021/03/mobil...
- nerdponx 6y agoI know we like to complain about regulatory capture and all, but at least some bad actors do in fact get caught: > In a complaint first announced in November 2020, the FTC alleged that Beam Financial Inc. and its founder and CEO, Yinan Du, also known as Aaron Du, promised users of Beam’s free mobile banking app that they could make transfers out of their accounts and would receive their requested funds within three to five business days. In fact, some users waited weeks or months to receive their money, which was particularly difficult for users who were struggling with lost income as a result of the COVID-19 pandemic, the FTC alleged. > ... > Beam also failed to give users the high interest rates the company promised, the FTC alleged. Beam repeatedly claimed that users would receive at least 0.2 percent or 1.0 percent, but many new users received a much lower interest rate of 0.04 percent and stopped earning any interest after requesting that Beam return their funds, according to the complaint. (from the PDF) > IT IS FURTHER ORDERED that Defendants must provide full refunds of the amounts held by or on behalf of Defendants for Covered Consumers (the “Full Refund Amount”), which consisted of at least $2.6 million on November 15, 2020, as follows Then again, maybe this is just a slap on the wrist. This is equivalent to robbing a store, getting caught, and then the only punishment being "you aren't allowed in the store again, and you have to return the stuff that you stole." Which is pretty damn lenient by the standards of the rest of the US justice system. Hopefully there will be a civil suit followup for additional damages. But even then, the company might just go into bankruptcy and the creditors are the one who get screwed. Meanwhile the executives who made the decisions in the first place just go home.
- jonwachob91 6y ago>> Then again, maybe this is just a slap on the wrist. This is equivalent to robbing a store, getting caught, and then the only punishment being "you aren't allowed in the store again, and you have to return the stuff that you stole." Which is pretty damn lenient by the standards of the rest of the US justice system. The FTC is a civil agency, not a criminal agency. Just b/c Beam and Yu settled with the FTC out of court doesn't mean the FBI can't go after them for criminal charges.
- gkanai 6y agoBeam CEO Yinan Du is the same guy who was CEO of Groupon clone in China, 24quan who's company did not pay wages and debts before it's eventual bankruptcy. https://www.techinasia.com/tag/24quan https://www.techinasia.com/tag/24quan https://www.americanbanker.com/news/beam-financial-vanishing-act-a-cautionary-tale-for-partners-of-fintechs https://www.americanbanker.com/news/beam-financial-vanishing... Du then goes to Harvard Business School to burnish his reputation and then starts Beam.
- walrus01 6y ago> groupon clone in China New New Pied Piper
- aarondu 6y agoLet’s first remove the misconception that it is anywhere near a Ponzi scheme. If it was, the news and Settlement will be mentioning that P work again. No mentions, no conclusive evidence of wrongdoing in the Settlement. Contrary to FTC statement and CNBC reports, the timeline is the following, and Beam had the paper trail to show that this is factual — 1) October 1, 2020 - Beam's ACH service provider's API service stopped working. Funds locked in banking service provider. 2) Early October - Beam began proactively working with its ACH service provider, banking service provider to unlock the funds help at bank. Service providers initially refused to unlock funds unless Beam indemnifies them. Months long disputes with ACH vendor who locked up the fund. 3) November 16 - All of $2.6 million except around 80 customers who Beam was not able to reach had been refunded in full by Beam and Beam's service providers. The remaining amount of these around 80 customers accounted for <$90K in aggregate dollar amount. 4) November 18 or about - FTC, knowing that Beam had returned vast majority of the $2.6 million, still filed a lawsuit against Beam. CNBC article came out around the same time misstating that Beam had not yet returned the funds and it was FTC who “made” the fund return happen or to be happened. 5) By January - Beam had since then contacted all remaining 80 customers and the return of funds had been complete for all where customers can be reached. FTC admitted explicitly to Beam on an internal call that they have not reviewed all the evidence —and that they WILL NOT review the full evidence proving Beam's innocence—which is against the principle of due diligence and fair justice. Beam offered full review of the facts and full disclosure of all facts and evidence, but FTC refused to examine the facts to rectify false allegations by FTC. This is clear evidence that this case was NEVER about truth-seeking, but a PR chess piece for FTC. About Settlement 1 - There is zero conclusive evidence of finding of wrongdoing. Nil. Only false allegations. 2 - There is $0 penalty. When was the last time you saw FTC taking on an scrappy SME for months, only to come to a $0 settlement? Shows there’s more to the story. To be clear, Beam as a company is not shutting down. Stop the misleading headlines just like when people call Beam a Ponzi scheme. False “entertaining” frivolous news comes and goes, but the damage on good people and startups is a permanent injustice. If the “System” can take down any small, defenseless SME with explicit refusal to review the FACTs, simply sensationalizing a false make-believe story to paint a picture of the “System” being glorious, fired up by fake news, is this the world we want to leave to our children?
- soupsranjan 6y agoLooks like they lost their ACH payments processor back in Dec 2020 leading them to prevent being able to handle ACH returns: https://abc7news.com/beam-financial-app-ftc-lawsuit-fintech/8504506/ https://abc7news.com/beam-financial-app-ftc-lawsuit-fintech/...
- ab_testing 6y ago> As per the article, the FTC alleged that some customers waited weeks to get their money back. Now I know that this is bad, but I have seen worse behavior from banks like Wells Fargo. Why is it that those banks just get monetary fines, but this new startup is forced to shut down ?
- ineedasername 6y agoWells fargo committed fraud in a few different flavors, but was probably never at risk of losing customers' money (unintentionally). Reading between the lines of Beam's long withdrawal times, it sounds like they had fundamental liquidity problems and at risk of insolvency already, and the backing bank would have to cover things (or invoke FDIC insurance? I'm not sure if this situation would apply) That's just a pragmatic explanation though: I'm not claiming there was any equivalency of fairness between the two. It seems to me that Beam should be dismantled, and also that Wells Fargo should have suffered some equivalent fate. But again, consider the pragmatics involved: Forcing Wells Fargo to be sold off piecemeal would just mean there were even fewer massive banks controlling that market.
- elliekelly 6y agoI’m honestly kind of shocked to see the FTC is shutting down anyone. They are a notoriously weak regulator thanks to decades of special interest lobbyists convincing congress consumer protection is bad for business. It makes me wonder what on earth the FTC (and perhaps other federal agencies?) had on Beam that they would agree to this settlement.
- refulgentis 6y agoRTFA! :) They were guaranteeing insanely high interest rates, it was designed to fail
- justinclift 6y agoMaybe a pyramid scheme that was caught early?
- autokad 6y agoI just had to file a complaint with the FTC over voyager app. I had deposited cyrpto currency to the correct wallet and they never showed up in the app. Its been 8 days and support wont even get back to me.
- elliekelly 6y agoYou might also consider contacting your state Attorney General.
- autokad 6y agoYeah I think I might. I only mention this because I think its related to the article. possibly same type of story different company.
- user-the-name 6y agoEven better, don't get involved with cryptocurrencies.
- emteycz 6y agoI'm downvoting you because it's OT here and the crusade for/against crypto is getting too tiring - there are enough threads focused on merits of crypto where you could share that sentiment.
- JumpCrisscross 6y ago> the crusade for/against crypto is getting too tiring - there are enough threads focused on merits of crypto where you could share that sentiment Counterpoint: security of holdings/nonreversability has been a clear tradeoff with cryptocurrency from the start. It’s frustrating to see public resources diverted to reinventing the wheel without a balancing revenue line. Put another way, there is arguing that cryptocurrency is stupid in general. And there is arguing that those who lose their money through it shouldn’t be entitled to the same level of public support as those who lose money in other investments.
- irjustin 6y agoThe people's deposit money is effectively gone. A few people might be able to find their money in an underlying bank to recover. The hope is the deposit is frozen and in the unwinding it'll be there waiting. Per the article, FDIC insurance doesn't cover this because it's a 'neo-bank' and the underlying bank didn't fail. The problem is how the deposits were used. If they're simply stored, it's easy to unwind, but the real problem is if the deposits were lent out or even used to pay other account's interest rates (which would qualify for a pyramid scheme?). I'm not familiar with the rules regarding a neo bank's access to an underlying deposit in compared to the bank itself, but I wouldn't put it past CEO Du to utilize deposits in the worst way possible.
- kijin 6y agoThat would be a Ponzi scheme. It would be a pyramid scheme if people were promised higher interest rates based on how many other people they recruit.
- Ice_cream_suit 6y agoI love the smell of a Ponzi scheme in the morning... "The FTC also alleged that Beam wasn’t able to give users the high interest rates it said it would give. The FTC first announced in November 2020 a complaint alleging that Beam and its founder Du promised that customers of the free mobile banking app could make transfers out of accounts and users would obtain their requested funds within three to five business days. However, the FTC alleged that some customers waited weeks or months to get their money. "
- tinus_hn 6y agoNice how the article ends with ‘so now this one is banned, here’s another service that does pretty much the same thing’
- pembrook 6y agoSoFi is no beam financial. We’re talking an $8b company about to go public with over 7 million users vs. some tiny scam app that had at most 30k users.
- antonp 6y agoBrace yourselves for more stories like these. Recently I got served a youtube add for a dapps (distributed apps) development workshop where the instructor went something like "learn how to create financial apps without any prior experience in just X days/weeks/months!!!". If crypto and decentralized finance is going to make good on the promise of democratizing finance then we have a bumpy road ahead of us. I'm still optimistic that in the end this will lead to a greater good, but there will be casualties while we work out the kinks.
- aarondu 6y agoLet’s first remove the misconception that it is anywhere near a Ponzi scheme. If it was, the news and Settlement will be mentioning that P work again. No mentions, no conclusive evidence of wrongdoing in the Settlement. Contrary to FTC statement and CNBC reports, the timeline is the following, and Beam had the paper trail to show that this is factual — 1) October 1, 2020 - Beam's ACH service provider's API service stopped working. Funds locked in banking service provider. 2) Early October - Beam began proactively working with its ACH service provider, banking service provider to unlock the funds help at bank. Service providers initially refused to unlock funds unless Beam indemnifies them. Months long disputes with ACH vendor who locked up the fund. 3) November 16 - All of $2.6 million except around 80 customers who Beam was not able to reach had been refunded in full by Beam and Beam's service providers. The remaining amount of these around 80 customers accounted for <$90K in aggregate dollar amount. 4) November 18 or about - FTC, knowing that Beam had returned vast majority of the $2.6 million, still filed a lawsuit against Beam. CNBC article came out around the same time misstating that Beam had not yet returned the funds and it was FTC who “made” the fund return happen or to be happened. 5) By January - Beam had since then contacted all remaining 80 customers and the return of funds had been complete for all where customers can be reached. FTC admitted explicitly to Beam on an internal call that they have not reviewed all the evidence —and that they WILL NOT review the full evidence proving Beam's innocence—which is against the principle of due diligence and fair justice. Beam offered full review of the facts and full disclosure of all facts and evidence, but FTC refused to examine the facts to rectify false allegations by FTC. This is clear evidence that this case was NEVER about truth-seeking, but a PR chess piece for FTC. About Settlement 1 - There is zero conclusive evidence of finding of wrongdoing. Nil. Only false allegations. 2 - There is $0 penalty. When was the last time you saw FTC taking on an scrappy SME for months, only to come to a $0 settlement? Shows there’s more to the story. To be clear, Beam as a company is not shutting down. Stop the misleading headlines just like when people call Beam a Ponzi scheme. False “entertaining” frivolous news comes and goes, but the damage on good people and startups is a permanent injustice. If the “System” can take down any small, defenseless SME with explicit refusal to review the FACTs, simply sensationalizing a false make-believe story to paint a picture of the “System” being glorious, fired up by fake news, is this the world we want to leave to our children?