Federal Trade Commission shuts down savings app Beam

Beam, a San Francisco-based savings app which launched in 2019, has been shut down as a result of a tentative settlement with the Federal Trade Commission (FTC). Beam offered customers high-interest savings accounts with rates at a maximum of 7% with access to funds 24 hours a day, 7 days a week, but customers complained that they were unable to access funds, prompting an FTC lawsuit in November that alleged “unfair or deceptive acts.” It also called into question the company’s lofty high-interest rate promises.

Why should we care?
Beam is cautionary tale for fintechs, and an example of a company that was unable to deliver on its promises, especially given marketing messages that promoted a no-fee, high-yield, accessible savings account “for the 99%.” Among the customer complaints, some stated that they were unable to access funds for months. Under the terms of the settlement – which still needs to be approved by a federal judge – Beam has agreed to a permanent ban from the industry and to reimburse customers $2.6M. The company, as well as CEO and founder Yinan Du will be permanently shut out of “marketing, promoting, offering, or distributing of any product or service that can be used to deposit, store, or withdraw funds,” according to the settlement document. In an interview this week, Du insisted that Beam was not at fault, and claimed that the FTC ignored evidence Beam brought to the table. For its part, the FTC is not convinced. “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 a statement. “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.