When Robin Mathis, a 41-year-old worker at a food factory in Brunswick, Georgia, flew to Philadelphia last June in hopes of an easy transition to his destination. He was ready to rent his car and recharge his ringtone card, as he had done several times before. In recent years, digital debit and credit cards have become their preferred payment methods.
However, at the Budget Rent a Car counter at Philadelphia International Airport, Matisse gets an unpleasant surprise. Budget doesn’t accept your credit or debit cards. Disappointed, Mathis travels from college with two children, but calls other airport rental companies, Enterprise, Avis and Dollars. Everyone said they would not get their card.
Two hours later, Mathis finally gave up and called Uber. Fintech makes them fail. After returning to Japan, he transferred most of his bell money to the OZK bank account. It is a regional institution with more than 200 branches and roots going back to 1903.
Digital-first “neobanks” like Chime are one of the hottest sectors of the fintech revolution. They offer fast approvals and cheap or free accounts, all without physical branches, and are a strong selling point during the pandemic. EMarketer estimates that Chime has grown from 7 million subscribers in the US in early 2020 to more than 13 million by the end of this year.
Chime’s valuation reached $25 billion in August and an IPO is underway that will allow the company to reach a value of $45 billion. Starting as a peer-to-peer money transfer service and growing into a digital bank, Squares Cash gained 12 million users in 2020. Square’s stock has more than tripled since the pandemic, and now has a market cap of around $90 billion.
But with the seamless registration and user-friendly features that digital banking customers love, scammers have broken various systems. This also includes “first-party fraud”. This scam is where unemployment insurance is illegally withdrawn in the state because the customer (who has an account in their own name) collects fees and withdraws money from the account to pay for these benefits before the transaction is allowed. I will do anything until I do. Don’t live or work.
Another tactic: take advantage of the interbank transfer network similar to the American tortoise by transferring money from one account to another and withdrawing the same money from both accounts during the transfer. Fintech providers are also vulnerable to identity theft and account theft, and scammers appear to have broken into other people’s accounts and started spending money.
Consider the case of Sheila King, four single mothers in Tampa, Florida who fell victim to a bell scam in July 2021. She woke up on Friday to see dozens of automated texts on her iPhone and made 62 transactions worth $744 from various companies in India. After sending back an SMS saying “No”, he automatically receives an SMS confirming that no charge was made. King also said he immediately called Chime customer support to report the allegations as fraud. But on Monday the bell bill was almost empty.
King denied the accusation, but Chime denied it. He tried two more times, and ended up copying a consumer reporter investigated by a local ABC subsidiary in an email to Chime. Four days later, after the reporter contacted Chime, and more than a month after King first reported the incident, Chime returned the money. (Chime admits he made an “early mistake” in his deal with King, but says he fixed the problem after King appealed, not at the request of the television reporter.)