The Federal Trade Commission (FTC) has sued operators of a mobile banking app for allegedly making false promises of offering high interest rates to users on their accounts and providing "24/7" access to their funds.
According to the complaint filed in the U.S. District Court for the Northern District of California, the regulator alleges that Beam Financial Inc. and its founder and CEO Yinan Du, also known as Aaron Du, promised users of their free mobile banking app that they could make transfers out of their accounts to receive their requested funds within three to five business days.
However, some users had to wait weeks or even months to get their money despite repeated complaints to Beam. And some others said they never received their money.
Beam, which promised 24/7 access to their funds, made it difficult for consumers to access their funds. It also failed to give users the promised best possible rate of at least 0.2 percent or 1.0 percent. The FTC said 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. Many of them said they had trouble reaching the company either by phone or by email.
These actions of Beam made it difficult particularly for those who have lost income due to the COVID-19 pandemic and caused them real financial harm.
According to the complaint, Beam blamed the delays in providing the requested money on issues with unspecified "banking partners" or "technology partners" and promised that the delays were temporary.
Last month, the FTC had launched a new fraud reporting platform, using which, consumers can easily report fraud and all other consumer issues directly to the regulator.
The new website, ReportFraud.ftc.gov, provides a user-friendly way to submit reports about scams, frauds, and bad business practices. It will also offer advice for consumers filing complaints on what to do next, based on their reports.
The new website comes at a time when the agency reported a significant rise in number of complaints about people losing money to scams on social media. According to FTC's latest data, people lost more than $117 million on social media scams in the first half of this year, compared to a loss of $134 million for the entire 2019.
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