On Monday, FinLedger reported the news that Beam, a mobile banking startup, had found itself in the crosshairs of the Federal Trade Commission (FTC). The investigation into the company, which started in 2020, concluded with a tentative settlement that banned Beam from operating a mobile banking app or “any other product or service that can be used to deposit, store, or withdraw funds,” according to a news release.
Following the FTC’s announcement, Beam’s founder Aaron Du went on the record with FinLedger to discuss the settlement. Although the company has reached an agreement with the FTC, and Du plans to observe the stipulations laid out in the settlement, he made it clear that he felt alternative options were limited.
“When you have a 300 pound gorilla pointing a gun at your face… then there’s really not much choice,” Du told Finledger.
And according to Du, the FTC had ignored evidence it brought to the table proving its innocence.
“We explicitly offered to the FTC full disclosure of evidence showing otherwise that we are completely innocent and we are not at fault here,” said Du.
He also claimed that the FTC “explicitly” said on an internal call regarding the matter that “it had not reviewed all the evidence” it would “not review all the full evidence despite that it proves their own story being completely wrong.”
“It completely goes against the principle of fair justice,” Du emphatically told FinLedger.
It’s an experience that has left Aaron Du concerned about the state of media and regulatory bodies, and how he thinks they both work against the success of small and mid-size enterprises like Beam.
“In general, I don’t think the system, as a government, [I’m] not saying the FTC persay, but in general the system might not have enough support for SME in general,” said Du.
In regards to the media coverage concerning the settlement, he said the “media doesn’t care about the survival of SME.”
While Beam is barred from most services that mobile banks offer, that does not mean it has shut down or that it isn’t allowed to pursue other opportunities. On that front, Du sees a future for his company.
“We have built a significant amount of software and IP around [fintech], both in terms of how we interface with other banking partners and ACH service providers… and gamification technology,” he explained.
Alongside the technology, Du also claims that he still has the goodwill of his customers and angel investors, noting that his investors are “extremely supportive,” despite the turn of events for the company.
In regards to the customers, Du said despite the initial hiccups in getting money back to its customers, many of them understood and appreciated Beam’s efforts and the hurdles it faced as an SME.
“The consumer sentiment, the vast majority of them, with very exceptional few cases, are very understanding,” he said.
But the interaction with the FTC and media has left Du concerned for the future of fintech startups.
Leaving “facts unexamined” has “proven to stifle innovation,” he said.
“We don’t want our kids to live in a world where you’re facing these two different factors, the media and the government, that are simply not understanding SMEs perspective,” he said.