Social-media influencer promotes Tellus savings account, but partnerships with major banks denied

  • Prominent social-media influencer promoted a savings account offered by Tellus
  • Capital One denies partnership with Tellus
  • Tellus removes references to partnerships with Capital One, Bank of America, and Wells Fargo
  • Tellus offers uninsured deposit accounts with high interest rates
  • Tellus accused of using customer deposits to fund riskier loans
  • FDIC demands Tellus revise misleading consumer-facing materials
  • Tellus continues to seek new customers through TikTok and ad campaigns
  • Tellus faces concentration risk with loans to affiliates of a real estate firm
  • Tellus mortgages have gone into default and lawsuits have been filed
  • Calls for government regulation of Tellus and other imitation banks

Prominent social-media influencer Faares Quadri promoted a savings account offered by fintech start-up Tellus, claiming it was FDIC-insured through a partnership with Capital One. However, Capital One denies any partnership with Tellus. Tellus has also removed references to partnerships with Bank of America and Wells Fargo. The company currently offers uninsured deposit accounts with high interest rates. However, Barron’s reporting revealed that Tellus was using customer deposits to fund riskier loans than advertised. After a cover story on Tellus showed false and misleading descriptions of its products, the FDIC was asked to investigate. The FDIC demanded that Tellus revise its misleading consumer-facing materials. Despite these issues, Tellus continues to seek new customers through TikTok and ad campaigns. The company also faces concentration risk with loans to affiliates of a real estate firm. Some Tellus mortgages have gone into default, leading to lawsuits. Calls have been made for government regulation of Tellus and other imitation banks.

Public Companies: Capital One (COF), Bank of America (BAC), Wells Fargo (WFC)
Private Companies: undefined, undefined, undefined
Key People: Faares Quadri (social-media influencer), Sen. Sherrod Brown (chairman of the Senate Banking Committee), Todd Phillips (law professor at Georgia State University focused on financial regulation), Helen Ngo (financial planner)

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Factuality Level: 3
Justification: The article contains misleading information and lacks fact-checking. It reports on false claims made by Tellus about its banking partners and their products. It also highlights the company’s use of customer deposits for riskier loans than advertised. The article provides some background information on the regulatory issues faced by Tellus and the opinions of experts, but it lacks in-depth analysis and verification of the claims made.

Noise Level: 3
Justification: The article contains misleading information and exaggerated reporting. It highlights the false claims made by Tellus about its banking partners and their products. It also mentions the company’s risky lending practices and lack of diversification, which increases the risk for its customers. The article provides evidence and examples to support its claims. However, it does not provide actionable insights or solutions.

Financial Relevance: Yes
Financial Markets Impacted: No information provided

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the misleading claims made by fintech start-up Tellus regarding its partnerships with major banks and the use of customer deposits for riskier loans. While the article pertains to financial topics, it does not provide information on any event that impacts financial markets or companies. There is no mention of an extreme event in the article.

Reported publicly: www.marketwatch.com