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"Beam" Legitimate or too good to be true" scam?

Hi all,

I have recently noticed adds on facebook and twitter from a company called "Beam" which is offering a high yielding account (2-4%) which is FDIC insured. Their website states their partner bank is Evolve Bank & Trust from West Memphis, Arkansas.

Anyone know anything about this company whether it is a legitimate business or a "too good to be true" scam?


  • It's been covered by Forbes and by ValuePenguin, so in that sense at least it seems real.

    It's probably fine as far as it goes, but I'm not enticed by "engagement" bonuses (the more you do on the app, the higher the yield). It's hard to see how a company serving as a middleman is going to compete with online only banks in the long run. Run ads, like websites? Or like that company (forgot its name) that created free ATMs - you just had to watch an ad before getting your no fee cash.

    There might be a small window where your money is not insured - if Beam handles the money in transit, rather than simply "introducing" your bank to its partner bank. It's not clear how they're processing transfers; they don't seem to say explicitly that it's by ACH, though the 1-2 day wait is a good clue.

    I'm not fond of hype, and Beam seems to have more than its fair share. It says that "Beam is a mobile bank account that pays 200x more than your average savings account" (I think it means 200x as much). But as noted by Forbes, according to the FDIC the average savings account paid 0.06% back in September (surely more now). 200x, 67x, either way they're meaningless numbers.

    It tries to impress with jargon: "It is a Demand Deposit Account (DDA) in technical terms." Yes, but it could have said checking account. See, e.g. CFPB's page: "A demand deposit account is just a different term for a checking account." But then again, perhaps not, since it doesn't offer checking.

    I had to dig to find the name of the bank partner. It's there in the blog, but not to be found in the Q&A on the home page. There you find simply that it's partnering with an unnamed FDIC-insured bank.

    ValuePenguin says that in beta, you'll be limited to $15K. If you're okay with the games and the modest limit, you might also consider rewards checking accounts. They typically require you to make a certain number of debit purchases a month, and maybe some other stuff, but will give similar yields.

    Since I can get 1.6% - 1.8% at online banks without any games, without caps, without a smartphone, without "engaging", I'll stick with that. YMMV.
  • Here's a link to the Forbes article. Hard to believe this type of business model will succeed, and they share very little about the business model...all very vague and feel good.

  • Here's a review by someone who got a response to some of his questions from Beam, though they were mostly "nonanswers". He also got a live account and describes how it works. To quote from his page: "Spoiler alert: it’s not good."

    I've been around Silicon Valley and startups enough to recognize some patterns. Not awful, just stuff you get used to.

    The idea that we can do better than anyone else because ... well, just because. Think of all the silly companies built during the dot com boom.

    It will be better because we'll apply TECHNOLOGY. Look at Oscar Insurance - a startup Obamacare company, a darling of VCs (unlike most startups). This excerpt about it from Politico could easily apply to Beam:
    Health insurance is a relatively staid business. ... Oscar wasn’t revolutionizing the model and the cliche about the “Uber of health care” ignored the fact that health insurance is one of the most- regulated markets in the country while Uber capitalized on regulatory loopholes.

    Oscar’s bet, indeed its raison d'etre, is that its superior technology will keep its patients healthier or provide them with less expensive medical interventions when they do become ill.
    It's very common not to say much about business models, especially when there aren't high barriers to entry. From a customer perspective it doesn't matter much unless it's illegal, or you would be hurt if the company went out of business. It's different for investors, and startups do share their business plans under NDAs to potential investors.

    Here's all I can find on their backing and staff:

    Statups try to generate buzz. They'll puff up whatever connections they have. So on the home page you see "TRUSTED BY OUR ADVOCATES". Not advocates so much as just publications where their launch was reported (like the Forbes article).

    What you don't see here is a list of partners or investors. (Even those can be greatly exaggerated, where partnership could mean just a normal transactional relationship.)

    A hype campaign, an effort to build a customer base quickly. Pushing customers to network with their friends. Attracting people by making it seem exclusive. Even Google did that with gmail:
    The aura of exclusivity and experimentation stuck to mail long after it did grow huge. Google kept increasing the number of invites each user could issue, but it didn’t open up the service to all comers until Valentine’s Day, 2007. And Gmail wore its Beta label like a badge of honor until July of 2009.

    To reiterate: nothing out of the ordinary with any of this. It could succeed, though I have my doubts. I don't see any rush to move a modest amount of money in right now, just to get a quarter percent more interest on it. If I wait a year (at an after tax opportunity cost of about $30 on $15,000), I'll survive.
  • Roy
    edited April 2018
    Thanks for the review link @msf. An example of members helping other members avoid financial missteps. That's why I started this thread to hopefully not only help myself make an informed decision, but others as well.

    Beam won't be getting any of our cash anytime soon either. Still not sure how they plan to make any money? Where's the money coming from to pay the interest rates they are offering?

  • edited April 2018
    "Still not sure how they plan to make any money? Where's the money coming from to pay the interest rates they are offering?"

    @Roy- Perhaps Mr. Ponzi is one of the major investors. He is, I believe, a distant cousin of the well-known financier, Bernard Madoff. Besides, how could you possibly go wrong with "Evolve Bank & Trust from West Memphis, Arkansas"? They could "evolve" into something great... why, the sky's the limit!

    Actually, the only Beam I'd trust is Jim.
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