Mobile Bank Beam has reached a settlement with the FTC over allegations that it mislead users about access to their funds & interest rates. The settlement still needs to be approved by a judge, but the settlement includes:
- Users given full and immediate access to their funds, including interest
- Beam is banned from operating a mobile banking app or any other product or service that can be used to deposit, store, or withdraw funds
- Beam is banned from misrepresenting interest rates, restrictions and other aspects of any financial product or service
Ideally there needs to be a new suite of laws introduced for these mobile banks that partner with a traditional bank as there are a number of issues currently. For example many are advertised as FDIC insured, but this is through a partner bank and often funds go to a holding account before hinting that partner bank and the funds are not insured during this time. Some mobile banks even use multiple partner banks. We’ve previously reported on the issue users had regarding withdrawing funds from Beam.
Lol they banned a disposable company…. CEO will just form Beam 2 LLC and do this shit again. Blacklist Aaron or you’re just showing there are no real consequences
IMHO, the key takeaway is don’t trust a fintech if it doesn’t provide a routing and account number for ACH transfers to/from another bank. And make sure the routing number is for an established financial institution. Porte and HMBradley fulfills that requirement where Beam did not.
Apparently Credit Karma savings doesn’t offer a way to ACH out/in and the only way to move money is via the app.
Edit:
Nevermind, looks like they now offer it. Last time I checked, they told me they didn’t have that option.
Oddly the owner claims to not be shutting down? https://twitter.com/aarondu/status/1376909164287381517
Oh and a full meltdown today? https://twitter.com/Drofcredit/status/1376793324187607050
Thanks for the context, but I fail to see how that’s a meltdown. How would you feel if you’re falsely accused of something when it’s your trusted partner that has messed up?!
Yeah, the final result is the same — customers can’t access their funds — but the reasons and truth kind of matters as well.
it doesn’t matter what he said or whether it will be shutting down or not, no one will trust him or BEAM anymore.
Good riddance. The owner Aaron (Yinan) Du had a sketchy past as it was
I tried it for a couple of weeks, thankfully I was able to get my money back out no problem, but holy shit was that app buggy as hell.
One biggest risk of dealing with a FinTech which offers FDIC insurance through real banks is that if the FinTech does not behave soundly as it claims, FDIC does not kick in immediately, and we as consumers have to wait for the FTC to step in, settle it, and enforce the settlement.
Great. And I just moved money over to HMBradley…
Def concerns me for HMBradley, just moved money there too
Yes, seems like putting any money in something that is not a real bank is a bad idea. Even SoFi is a real bank now so there are plenty of real bank options.
Are you sure about SoFi? At the very top of the Statement of Financial Condition in the footer on their main page, it says:
“SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC. Member FINRA/SIPC. Neither SoFi nor its affiliates are a bank.”
SoFi is not a real bank yet, but it has received preliminary approval for a bank license October last year, and it recently acquired Golden Pacific Bank in California. So soon it will be a real bank, like Varo money.
https://www.reuters.com/article/us-sofi-bank-charter/fintech-startup-sofi-gets-preliminary-approval-for-u-s-bank-charter-idUSKBN27D27W
Anyone have a reference of mobile bank brands and who there partner banks are? Knowing who and whats FDIC insured is a big deal.
I used Porte (owner of ACE Express), which partnered with Metabank (Netspend)
IMO you gotta do your homework and evaluate the risk/reward ratio. Personally I will stay away from any FinTech who partnered (or claimed that they hold your money) with many banks. Also need to jump many hoops to get the advertised APY – one of the reason why I will never go with HMBradley
You say “used” not “use” Porte, so I’m curious why you stop using them. The 3% on $15k is certainly appealing, but I’m also wary of actually stashing $15k with Porte.
Thanks Avi. Related question–I haven’t really kept any money in my Porte account so minimal interest, maybe $1-$2 tops, but I did get the $50 bonus for opening an account with a referral. How much was your 1099 for and how did it come, the mail? Now that it’s tax time I’m trying to figure out if I should have received a 1099 for the account for the $50 plus whatever minimal interest I got, or if I’m below their 1099 threshold.
I used Porte and received referral bonuses, no interest. Called them and they said they would not issue a 1099. I will have to self report the bonuses.
HMBradley has 3% on savings and they are a bank.
HMBradley is not a bank. It is a Fintech that partners with a bank (Hatch Bank). AFAIK, the only Fintech that has successfully made the transition with an approved banking license is Varo.
HMBradley is hardly “many hoops”. A monthly $1 DD and you are set.
The only hoop for HMBradley is that you do a direct deposit?
Aaron Du’s is borrowing the playbook from his experience in China. Offer investment products to investors with high interests. Then, they can only able to pay out this kind of high interest in the first few payments. Once the scheme busted, they usually present the offer to the investors by paying principle only (in China, it is even worse, you cannot even get your principle back) and desperate investors will accept this kind of offer. I believe this is the situation gonna happen in here. You signed a settlement agree with them by receiving the principle back only.