This is going to come off sounding a bit like a middle age rant, but so be it.
On the one hand, this sounds like many of the hard luck stories from the housing meltdown. People don’t read the fine print and don’t understand what they’re signing up for. You can buy a house with no income and no money down? Yes!
No. Well, yes, but did you read the part where your rate increases from zero to 10% after 5 years and run the math on what that means? You didn’t.
Fast forward to today and you have an entire cohort of people who have been consuming social media like it was news (and not a bunch of solitary schmucks broadcasting stream of consciousness drivel that is packaged as fact) who are RIPE to fall prey to garbage they see online. Why? Because reading comprehension and critical thinking has been sacrificed to 10 second videos and attention spans that lose focus the more they swipe left. Because if you got 1 million followers you must be right.
And so here we are. The land of uneducated social media influencers being paid to promote garbage to ill informed followers.
Just the latest iteration of the traveling medicine shows where people could buy Dr. Gallants Rejuvenating Tonic and Body Elixir that cures everything.
This is a brilliantly written post with a nice bit of humor to end it. Well done.
I agree that fintech ideas (emphasis on tech) are badly needed in the world, but also agree with chemEguy's observation that the popularity of the firms is driven by short form social media and influencers. This can lead to unscrupulous behavior.
This is where I mourn the loss of most forums on the internet. It was a golden age, now gone. This little island we live on, early-retirement.org, is a grand hold out.
Kids may say: "You are criticizing our important contributors, our influencers. What makes them different than the 'influencers' on your quaint little old-fashioned forum?"
To that, I would remind them that well moderated forums are generally cooperative efforts for the good of the users. Posts outside of the goals are scrubbed. Social Knowledge can run the site and make a profit with the ads, but as far as I know, our members don't profit individually on a view or "like" basis. Social Knowledge keeps us grounded through their excellent selection of moderators, so we don't go off in the weeds. (I've been found in the weeds by the mods, thank you for snagging me back.)
What's my point? My point is that on this forum we share a heck of a lot of impactful advice. Advice that really impact a person's financial life. Heck, many of us moved up our ER dates based on the good knowledge we find here. Gumby's yearly post of "important 'trigger' levels" of income is worth its weight in gold, for example.
The advice here is for the furtherance of our community, it isn't to get some click or view in order to pocket a few pennies that can turn into Megabucks if you have enough influence and followers. And that's what makes the original article so disheartening. This fintech's popularity was driven bottom up from TikTok and the like. On this forum, a search of "Yotta" shows nothing until this bankruptcy hit the headlines. And I can guarantee you that if it did come up, people would throw up red flags once they saw "Novel Sweepstakes" as part of their operating procedures.
As demonstrated by the Synapse bankruptcy, FDIC insurance won't necessarily protect customers if a fintech implodes. Here's what you need to know.
www.forbes.com
Four years ago, Lauren Scott was scrolling through TikTok when she saw a video from EcommJess, a personal finance influencer with 750,000 followers, promoting Yotta Savings, a fintech app offering a chance to win cash and other prizes on top of regular interest. Scott liked the novel sweepstakes incentive and Yotta’s lack of fees, along with something way more traditional. “It was FDIC-insured, which was one of the main things that I looked for because you never know what to trust,” says Scott, 27, who lives in the Tacoma, Washington suburbs with her husband and seven-year-old daughter. Eventually, the couple moved all their money to Yotta.