Pay up
How to fraud-proof your wallet
Happy New Year, gang. This is your Stock Market Rundown for January 3rd, 2024. Once again, thank you so much for hanging out with me — I appreciate y’all. Now, let’s get into it:
TODAY’S TOP STORY: SHADY RIVALS
Venmo, Cash App, Chime… there have never been so many ways to settle a bet on a football game, or pay for your half of a pizza. Peer-to-peer payment apps have become the go-to services for casual payments between friends.
With so many startups jumping into payments, the big banks obviously had to come up with their own solution. Picture it: a dozen old male bank CEOs, conspiring over scotch and cigars at a ski lodge somewhere, in front of a roaring fire.
“We’ll create our own peer-to-peer digital payment system, and lock our clients into a system we manage. None of these snot-nosed Silicon Valley upstarts will be able to compete. Brilliant, gentlemen, simply brilliant!” Their innovation, Zelle, rolled out in 2017, and allows instant, free digital payments between thousands of financial institutions.
Well, the old guys had a decent idea, but according to US regulators, their execution was lousy. Earlier this month, the US Consumer Financial Protection Bureau said it’s suing the banks that control Zelle.
The watchdog charges that the banks rushed Zelle to market without proper safeguards, making it “a gold mine for fraudsters”. Hundreds of thousands of consumers filed fraud complaints, but the banks denied them assistance.
In some cases, consumers were told to contact the fraudsters to recover their money. While going full Dexter Morgan on the guy who scammed you for $500 by selling you a broken Xbox might be a fun fantasy, it’s not exactly a realistic solution to criminal fraud.
Regulators say hundreds of millions of dollars have been stolen from consumers using Zelle. Apparently, when it comes to theft risk, Zelle is the equivalent of riding a tourist bus in Barcelona with your iPhone sticking out of your back pocket.
Zelle isn’t the only peer-to-peer payment platform that’s been under the regulatory microscope. Federal prosecutors have been probing Cash App after whistleblowers accused it of doing cryptocurrency transfers for terrorist groups. Cool, somebody finally found a real-life use case for crypto—illegal transactions!
With fraudsters treating peer-to-peer payment apps like a pinata at a toddler’s birthday, how can consumers make sure their wallets don’t get whacked? Well, keep in mind that a quarter of digital banking fraud is done via “social engineering”—typically, impersonation.
So, if you get an email or phone call from somebody claiming to be a government agent, “Microsoft tech support”, or your great-aunt who needs to be bailed out of jail in Bolivia because her ayahuasca journey went sideways? Just hit “Delete”.
SO WHAT ELSE IS GOING ON?
Cosmetics retailer Ulta Beauty raised profit forecasts thanks to booming demand for perfumes and makeup. Hey, now that eleven-year-olds are buying wrinkle cream, their target market size has probably doubled.
The Container Store is getting crammed in the trash can, with the business seeking bankruptcy protection as it battles cash flow problems.
Lululemon raised full-year revenue guidance thanks to energetic demand for its gear in both the US and China. Who knew overpriced leggings could be the thing to unite the two global economic superpowers?
Just in time for New Year’s resolutions: the private equity owners of Crunch Fitness are trying to sell the gym chain. Experts peg the value of the 460-location franchise at $1.5 billion. That’s probably the amount of money people will spend this January signing up for memberships they’ll stop using by March.
That’s it for today, my lovelies. Have yourselves a wonderful weekend, and I will catch you on the flip side next week. Yours in capitalism, The Axe