BankTechWealthtech

FTC to close down mobile banking app Beam, pending District Court Judge approval

Beam must refund about $2.6 million in customer deposits and interest, according to CNBC

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,” as part of a settlement with the Federal Trade Commission, according to a press release. The agreement still needs to be approved by a district court judge in San Francisco, according to CNBC.

CNBC reports that Beam must refund about $2.6 million in customer deposits and interest. The tentative settlement bars Beam founder and CEO Yinan Du, also known as Aaron Du, from operating a similar business going forward. Beam and Du don’t admit wrongdoing under the settlement, says CNBC.

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.

The FTC also alleged that Beam wasn’t able to give users the high interest rates it said it would give.

“People taking a financial hit from the pandemic may need 24/7 access to their savings, which is exactly what Beam Financial promised and didn’t deliver,” Daniel Kaufman, Acting Director of the FTC’s Bureau of Consumer Protection, said in a statement. “The message here is simple for mobile banking apps and similar services: Don’t lie about your customers’ ability to get their money when they need it.”

The FTC had no further comment to provide, a spokesperson told FinLedger in an email. Beam could not be reached immediately for comment.

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.”

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