Beam Financial Banned, Must Provide Full Refunds as Part of FTC Settlement
Beam Financial launched in 2019 as “the first mobile high-interest savings account for the 99%.” It was attracting customers with high interest savings accounts, until it started having trouble processing customer withdrawals late last year. Withdrawal transactions were pending for months and customer service from the fin-tech company was unavailable or useless. Now, the company has been shut down for good after a tentative Beam Financial settlement with the Federal Trade Commission.
The company will be banned from offering mobile banking services and must give full refunds to users as part of a settlement with the Federal Trade Commission over allegations the company falsely promised users they would have “24/7” access to their funds and earn high interest rates on their accounts. It also is prohibited from misrepresenting the interest rates, restrictions, and other aspects of any financial product or service.
FTC alleged that Beam Financial Inc. and its founder and CEO, Yinan Du, also known as Aaron Du, promised users of Beam’s free mobile banking app that they could make transfers out of their accounts and would receive their requested funds within three to five business days. In fact, some users waited weeks or months to receive their money, which was particularly difficult for users who were struggling with lost income as a result of the COVID-19 pandemic, the FTC alleged.
Beam also failed to give users the high interest rates the company promised, the FTC alleged. Beam repeatedly claimed that users would receive at least 0.2 percent or 1.0 percent. It advertised rates as high as 7% actually, if users performed certain tasks such as referring new customers. But many new users received a much lower interest rate of 0.04 percent and stopped earning any interest after requesting that Beam return their funds, according to the complaint.
Beam is required to issue full refunds, including interest, to all customers. It adds up to about $2.6 million in customer deposits and interest. Beam must also update the FTC on its refund efforts, including identifying any consumer complaints. It also is prohibited from benefitting from any personal information collected from customers.
There is also a pending class action lawsuit filed in Florida, that accuses Beam Financial Inc. of fraud and negligence, and seeking unspecified damages.
You can read Beam Financial settlement details here.