On Monday, the Federal Trade Commission (FTC) announced that it reached a proposed settlement with mobile banking app Beam Financial Inc. over allegations that the company “falsely promised users they would have ‘24/7’ access to their funds and earn high interest rates on their accounts.”
In November 2020, the FTC sued Beam Financial and its founder and CEO, in the Northern District of California, alleging that the defendants assured users “they could make transfers out of their accounts and would receive their requested funds within three to five business days.” However, it purportedly took some users weeks or months to receive their money.
“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 the press release. “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.”
Beam Financial also allegedly failed to give users the promised high interest rates. In particular, the Commission asserted that Beam Financial claimed users would receive at least 0.2% or 0.1%, however, many new users received the lower interest rate of 0.04% and “stopped earning any interest after requesting that Beam return their funds.”
According to Monday’s proposed settlement, Beam Financial is prohibited from operating a mobile banking app or any product or service that “can be used to deposit, store, or withdraw funds.” The defendants are barred from misrepresenting consumers’ access to their funds, interest rates, and other aspects of a financial product or service. Beam Financial is also required to provide full refunds with interest to its customers, which totaled more than $2.6 million as of November 15, 2020, and periodically report and update the FTC on its refund efforts, including providing information on consumer complaints. Additionally, the company is prohibited from disclosing or benefitting from its customers’ personal information and it must provide compliance reporting to the FTC.
The FTC is represented by its own counsel. The defendants are represented by Hinch Newman LLP.