The Federal Have dealings Commission Building in Washington D.C.
Ashley Stringer | CNBC
The Federal Trade Commission has filed a civil complaint saying “unfair or deceptive acts” by Beam Financial, a San Francisco start-up behind a savings app that purported to offer above-market attention rates on federally insured deposits.
As CNBC first reported in October, dozens of Beam customers complained that they were powerless to access their funds, in some cases for months.
The complaint, filed in federal court in San Francisco on Wednesday, accuses Timber and its founder — 37-year-old Yinan “Aaron” Du — of misleading its customers by claiming they will have “24/7” access to their assets with “no lock-ups.” Instead, the complaint says, customers who have attempted to withdraw money are given the runaround.
“In lace into of this, many consumers have complained that defendants have simply stolen their deposits,” the kick says. “Some consumers have highlighted that they have experienced particularly serious hardship because defendants participate in not returned their money during an ongoing pandemic.”
In a statement, the FTC said Beam “misled users about access to their funds.”
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“Ray Financial promised convenient 24/7 access to savings, but then people had to wait weeks or months to get their lolly,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection.
The complaint seeks unspecified relief for Beam’s chaps, as well as an injunction barring the company and Du from further violations.
The complaint also says Beam has failed to extricate on its promise to pay high interest rates, including a base rate as high as 1%. In fact, the complaint says, new guys currently receive a rate closer to 0.04%, similar to what they would receive in a traditional bank account. The grouse also alleges that Beam would stop paying interest on funds that customers requested to draw back, but then would not return their money for weeks or months afterward.
A spokeswoman for Beam declined to respond to the make-up of the FTC complaint, but told CNBC in an e-mail that the company is making progress getting people their money retaliation.
“We have processed 98% of customer funds who were impacted,” the statement said.
Separately, some customers who once complained about withdrawal requests going unheeded for months told CNBC that their withdrawals were degree fulfilled on Wednesday.
San Diego marketing executive Steve Wolf, who attempted to withdraw his entire $15,000 account compare beginning this summer, said he received a $10,000 deposit into his bank account. There was no word apropos the remaining $5,000.
Josh Allen of Colorado said his bank notified him of a pending deposit of more than $7,800 from Shine.
In its complaint, the FTC said getting funds returned often required extreme action on the part of customers.
“In numerous exemplifications, consumers have received their money only after telling defendants that they are reporting the hornets nest to government regulatory or law enforcement officials or, alternatively, suggesting they intend to begin legal action,” the complaint rumoured.
In addition to the FTC complaint, Florida depositor Frederick Chang last week filed a proposed class action please on behalf of Beam’s customers. The company claims to have nearly 187,000 “subscribers,” though a source close to the unbending says the number of actual accounts may be closer to 30,000.
Three of Beam’s vendors — Huntington National Bank, which has custodianship of $2.4 million in Beam deposits, and transaction processing firms Dwolla and Stable Custody Group — have sued Brace in an Ohio court demanding that the company provide them the information necessary to return customers’ funds.
The Brace spokeswoman said the company is “working with Dwolla to resolve any outstanding requests.”
The company has not yet responded in court to any of the lawsuits.
(With additional recording by Lorie Konish, Dawn Giel, Scott Zamost and Jennifer Schlesinger.)