Mobile Savings App Beam Refunds Deposits; Shut Down By FTC

Mobile savings app Beam has shut down after reaching a tentative settlement with the Federal Trade Commission (FTC) over a case last year in which dozens of customers had trouble extracting their money, CNBC reported.

Beam, as part of the settlement, will now also be banned from running a mobile banking app or any other product or service used to deposit, store or withdraw funds, according to CNBC.

The company will also be banned from misrepresenting interest rates and restrictions of financial products, along with other such things, and the company also has to refund around $2.6 million in customer deposits and interest. Company Founder Yinan “Aaron” Du will be banned from starting a similar company in the future, CNBC reported.

This agreement still has to be signed by a federal judge in San Francisco. The settlement doesn’t include any admission of wrongdoing from Du or the company, according to CNBC.

Beam was rolled out in 2019, billed as “the first mobile high-interest savings account for the 99 percent.” It claimed its business model would let it pay customers higher interest rates on a deposit as opposed to a traditional bank, CNBC reported. The latter came about through its operating only from an app and having no physical branches, giving customers “24/7” access to money.

Beam said it paid between 0.2 percent and 1 percent, which is around 20 percent higher the typical rate, and it said it did so through FDIC-insured deposits, according to CNBC. That came despite the company saying it wasn’t a bank.

Customers first began reporting issues last spring, with withdrawal requests being ignored and complaints met with excuses that blamed the problems on the pandemic or the company’s vendors, CNBC reported. The FTC lawsuit came in November and blamed the company for “unfair or deceptive acts.”

PYMNTS reported that as the lawsuit came down in November, customers looking to rectify the problems could not reach Beam for customer support.