The Federal Trade Commission announced that it reached a settlement with Beam Financial, resolving allegations that marketing for the company's mobile banking app misled consumers about the availability of funds and the interest rates that consumers would earn. As part of the settlement, the company agreed to give full refunds to consumers and to be permanently banned from offering mobile banking services.
Specifically, the FTC alleged that Beam falsely advertised that consumers could withdraw their funds at any time with "no lockup," claiming, "Get 24/7 access to your funds. Easily and securely move funds into/out-of your Beam account." The FTC also alleged that Beam falsely claimed that consumers could, "Earn and withdraw anytime."
The FTC also alleged that Beam misrepresented the interest rates that consumers would earn on their deposits. The FTC said that Beam made false claims such as, "the industry's best possible rate" and "best paying bank account." The FTC also said that the specific minimum interest rates that the app offered to consumers -- .2% at the Google Play Store and 1% at the Apple App Store -- were not actually paid to consumers.
In announcing the settlement, 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."
One of the most significant aspects of this case -- which should serve as a strong warning to financial service providers and others -- is that the settlement agreement in this case was more than just a promise to comply with the law in the future, as is typical in many FTC settlements. Here, Beam Financial agreed to a total ban from the business, with Beam being prohibited from being involved with any "product or service that can be used to deposit, store, or withdraw funds."
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