In the summer of 2023, 55-year-old Michigan resident Felisa Ware was hoping to improve her credit so she could buy a bigger house where her ailing mother could live with her. She signed up for a subscription service from TomoCredit. The six-year-old San Francisco startup, which is backed by investors including Morgan Stanley and Mastercard, promises to boost consumers’ credit scores by, among other things, helping them report additional on-time payments, including for rent and cell phone bills, to the credit bureaus. After six months, Ware decided Tomo’s “VIP” plan wasn’t worth the $34.99 a month she was paying for it. (Tomo typically charges an exorbitant $129.99 a month for this tier of service–Ware used a promotion to get a lower price.) Yet when she looked in Tomo’s app and on its website, she couldn’t find an option to cancel.
What followed was a maddening exchange of 20 emails, with Ware repeatedly asking Tomo’s customer support to cancel her subscription. Instead of honoring her request, Tomo replied with questions on why she was canceling and whether she’d rather receive a free month instead of deactivating. At one point, Tomo’s customer support team went dark for five days, then 20 days. “It was just so bizarre and frustrating,” Ware says. Exasperated, she emailed Michigan’s attorney general and started posting on social media, tagging Tomo’s corporate accounts and its CEO, 35-year-old Kristy Kim. “They’re taking people’s money,” says Ware, who works in health care. “I work hard for my money.”
On January 28, 2024, about a month after her first request to cancel, TomoCredit attempted to charge Ware’s debit card again, though she had already called her bank and blocked any future Tomo charges. Finally, on January 30, her subscription was deactivated. Now Ware wonders what happens to Tomo customers who aren’t as persistent as she was. “I think about my mom, who is 78,” she says. “She would be so frustrated, and she would still be paying for that service to this day, because she would have just given up.”
Tomo CEO Kim says her customer service team had “good intentions” and aimed to understand why customers were dissatisfied. “Many of our customers are financially uneducated, unfortunately,” Kim says, adding that her support team tried “to make sure [users] at least got the basic benefit that we offer.” After we asked her pointed questions about Felisa Ware’s case and the absence of an online option to cancel, Tomo updated its app on October 9 to include a “Cancel Membership” button.
Kim says Tomo has roughly 100,000 paying subscribers; over the past year, consumers have filed 557 complaints to the Better Business Bureau about the startup. (To put that level of customer dissatisfaction in perspective, PNC Bank, the sixth largest bank in America with more than 10 million customers, received 599 Better Business Bureau complaints over the same year.) Most of the complaints against Tomo filed in August and September cited problems with canceling the service.
The fintech industry’s reputation has taken a hit this year with a spike in regulatory enforcement actions and the failure of banking-as-a-service provider Synapse exposing the chinks in fintech neobanks’ FDIC insurance claims. The subscription cancellation problem at multiple startups could become yet another black eye.
Last November, Brigit, a New York fintech that offers cash advances of up to $250 for $8.99 a month, was forced by the Federal Trade Commission (FTC) to refund $18 million to its customers. The FTC alleged that Brigit used deceptive practices in offering cash advances and made it too hard to cancel subscriptions. In a statement at the time, Brigit said the claims were “factually inaccurate” but that it decided to settle with the FTC to “put this matter behind us.” A Brigit spokesperson told Forbes that over a year ago, the company improved its cancellation process to make it faster and simpler, so that it can be completed online in two steps.
Albert, a Los Angeles-based digital bank that offers checking, savings and investment accounts and cash advances up to $250, has received 566 Better Business Bureau complaints over the past 12 months, many of which also relate to deactivation problems. Consumers’ confusion is so high that a YouTube video on how to cancel your Albert subscription has attracted more than 15,000 views and dozens of comments from irate users. We spoke with two of Albert’s former customers for this article who said they had trouble canceling their subscriptions. (Albert didn’t respond to our multiple requests for comment.)
To be fair, the hard-to-cancel problem isn’t unique to fintechs. In March 2023, the FTC proposed a broad, “click to cancel” rule requiring companies to make it as easy for consumers to cancel a subscription service as it is to sign up for it. (Update: On Wednesday, Oct. 16, after this story was originally published, the FTC commissioners voted 3-to-2 to adopt a final rule with a few modifications from the initial proposal. Companies will still have to make it as easy to cancel as to sign up, but they will, for example, be free to try to talk consumers out of cancelling by offering reasons not to cancel or a different plan. The rule is slated to take effect in six months.) Rocket Money, a personal finance management app (previously known as Truebill) that helps consumers with subscription cancellations, cites health clubs as the worst offenders.
But it’s worth noting that many fintech startups have promoted their mission as serving consumers who are left behind or mistreated by traditional financial firms. That makes the cancellation issue particularly troubling.
Kristy Kim launched TomoCredit in 2019 as a way for immigrants, international students and other U.S. residents with thin files at the credit bureaus to get better access to credit–a problem she experienced herself after coming to America from South Korea. For years, the company’s primary product was a credit card with an unusual twist: Consumers could set up automatic payments to pay off the full balance every seven days, a feature that could help them build up an on-time payment history and hold down their reported credit utilization rate. It had 50,000 active cardholders by the end of 2021, Kim told us when we spoke with her in April 2023.
In the summer of 2023, she pivoted the business, essentially pausing the credit card and introducing a subscription service for improving people’s credit scores, called Tomo Boost. Kim says the fast adoption of Tomo’s subscriptions propelled the startup to become profitable late last year on a generally accepted accounting principles (GAAP) basis. She expects the company to reach $20 million in annualized revenue by the end of 2024, and she says it has enough cash in the bank to continue funding the business for three years. (TomoCredit was last valued at $222 million in a 2022 fundraise, according to PitchBook, and has raised about $40 million in equity funding.)
Yet for all of Tomo’s purported financial success, the 30-person startup has a tiny customer service team of just five people, only three of them in the U.S. Until just last week in its app and on its website, there was no online option to cancel, even though customers have been complaining about the issue for at least a year. Why did it take Tomo so long to add one? Kim says she was focused on the development of what she considers Tomo’s most valuable intellectual property–a proprietary credit score it has developed, which she hopes will compete with the ubiquitous FICO score.
“We’re a tiny company. We’ve had a lot going on…we were hiring an AI engineer from Google, and we were also working on partnership deals that I have not announced publicly yet,” Kim says. “I think in hindsight, maybe if we could have offered it [in the app] earlier, that would have been better.” She says her team may have underestimated how many customer service people Tomo needed. Asked if any U.S. regulators have contacted TomoCredit regarding subscription cancellation complaints, Kim says, “Not that I know of.” The startup doesn’t seem to have an on-staff general counsel or head of compliance, according to LinkedIn data, and Kim didn’t respond to our question of whether it has one.
Difficulty canceling isn’t the only issue unhappy Tomo customers have raised. In its online description of its top-tier VIP plan, the first bullet says Tomo offers “up to $30,000 credit line.” But in consumer complaints, many Tomo users say the credit line never appeared on their credit history.
And with so many of its customers trying to cancel their subscriptions, it’s unclear whether Tomo’s credit-boosting service even works. Rocket Money has considered offering a credit-boosting service but has so far opted against it, says cofounder and chief revenue officer Yahya Mokhtarzada. He notes it can be difficult to know if additional payments (such as for rent and cell phone bills) being reported to the credit bureaus are actually having a significant effect on people’s credit scores, since many of the most common credit-scoring models still don’t take those payments into account. Instead, they stick to “credit” accounts–bank credit cards, car loans, mortgages and the like. Moreover, consumers have a free alternative to improve their score: Experian, one of the three main credit bureaus, offers Experian Boost at no cost to help consumers report additional payments to credit bureaus.
Nine-year-old digital bank Albert, whose website claims it has over 10 million users, has also seen a spike in customer complaints. Rhonda Hudgins, a 62-year-old Georgia resident, had been using the app in 2020 for its small-dollar loans and wanted to log in again last year to see if she had any money remaining in her account. She says Albert required her to sign up for its paid version, which cost her at least $9.99 a month, just to see how much money she had left. After she paid for that access, she tried to cancel using the option provided through Albert’s app. But she says it didn’t work, the same way it didn’t work when she tried to cancel in 2021. Both times, she had to call Albert and tell them to cancel for it to stick.
James Riddick, a 51-year-old theater manager based in Brooklyn, spent two days trying to cancel his Albert subscription through the app in March 2024 without success–it wasn’t until he contacted customer support and jumped through more hoops that his account was deactivated.
Over the past 12 months, consumers submitted 15 complaints about Albert’s subscription cancellation practices to the Consumer Financial Protection Bureau (CFPB). Two were filed last month, including one from a Florida resident who wrote, “I’ve been paying for about 2 years despite numerous attempts to cancel.” Another common criticism is that, in order to deactivate your Albert subscription, the company requires you to first transfer all of your money out so that your balance is $0. “I don’t understand how this is legal,” reads one CFPB complaint from a Pennsylvania resident filed in April. “They’ve withdrawn about $75.00 in subscription fees for something I have no use for.”
Not all fintech apps make it so difficult. Empower, a San Francisco-based company that offers cash advances and loans of up to $400 for $8 a month, can be canceled through three clicks in its app, according to CEO Warren Hogarth. Even if customers have outstanding loans or cash advances, they’re able to cancel their subscription, Hogarth says. Santa Monica-based Grow Credit offers a virtual debit card that can be used to pay for services like Netflix and Spotify, and the startup claims it can improve credit scores by up to 44 points. Consumers can cancel their Grow Credit subscriptions (one of its plans is free, while the other two cost $6.99 and $12.99) through its app or website, even if they have an outstanding loan balance, according to the company.
