Beam Financial, Inc. (Beam), a mobile banking app, will be banned from offering any service that may be used to deposit, store, or withdraw funds, and must give a full refund to users as part of a settlement with the Federal Trade Commission (FTC). It also is prohibited from misrepresenting the interest rates, restrictions, and other aspects of any financial product or service.
The FTC alleged Beam falsely promised users they would have 24/7 access to their funds and earn high interest rates on their accounts. Beam promised its users they could make transfers out of their accounts and would receive their requested funds within three to five business days. However, some users waited weeks or months to receive the funds. Beam also claimed users would receive at least 0.2% or 1.0% on their accounts, but many users received an interest rate of 0.04%. Consumers also stopped earning interest after requesting to withdraw their money even though Beam did not return their funds until weeks or months later.
As part of the settlement, full refunds — including interest — must be provided to all of Beam’s customers, which consisted of at least $2.6 million in November 2020. Further, Beam must periodically update the FTC on its refund efforts, including identifying any consumer complaints.
Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection said, “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 commission vote approving the stipulated final order was 3-1, with Commissioner Rohit Chopra, likely the next CFPB director, voting no.