Reject Convenience Forum

• CNBC: ‘I have no money’: Thousands of Americans see their savings vanish in Synapse fintech crisis
• NPR: The hidden world behind your new "banking" app

So, the story: customers of the new bank-like app Yotta, which offers debit cards, chequing accounts, saving accounts, and credit cards, have lost hundreds of millions of dollars since the app froze all accounts in May. Yotta, which does not hold money but makes a shiny bank-like app, transfers it to middle-man Synapse, who then pools almost all customer money into a single account with Evolve, who then disburses the money amongst various real banks. Synapse when bankrupt, and kept no organised records, so no one knows where the money is, and who it belongs to.

Why did people put their hard-earned cash in a bank-like app Yotta?

• Yotta advertised being backed by the FDIC. “Just like Wells Fargo!” I guess nobody read the fine print (below).
• Yotta offers gamified savings: the more money you kept in your savings account, the more tickets you got in a lottery for small and big cash prizes. E.g., if you win, Yotta might fully cover the cost of your book purchases you just bought with your Yotta debit card. Yotta, by offering bonus tickets, went a step further than the prize-linked savings accounts seen in banks around the world (PLSAs are almost unheard of in the US):
  “The difference was that I was getting higher interest rates than I could at any local banks. It was nice. For the longest time, they would give you a number of tickets based on what you had saved with them—I was ‘winning’ maybe 50 cents on average per day. Nothing crazy, but it’s definitely better than the local banks.”

Fine print:
Yotta is a financial technology company, not a bank. Banking services provided by Evolve Bank & Trust, members FDIC and Synapse Brokerage LLC Program Banks. Please visit https://synapsefi.com/list-of-program-banks for the full list of Program Banks.

Quotes:

• “We were informed last Monday that Evolve was only going to pay us $500 out of that $280,000. It’s just devastating.”
• “A bank just robbed us. This is the first reverse bank robbery in the history of America.” (Has this guy not heard of Wells Fargo?)