Senate Banking Committee Chair Brown Asks On-line Savings Platform for Info on Business Model and Risk Practices

Senate Banking Committee Chair Sherrod Brown (D-OH) requested information from an on-line "smart savings platform powered by real estate," on the company's potential risks to customers.

Prompted by reports that raised "several red flags," Mr. Brown asked Tellus App, Inc.’s ("Tellus") President and Chief Technology Officer Jeromee Johnson to provide information about Tellus' "business model, risk assessments, and marketing practices." Mr. Brown noted that the company is not a bank, but that it "market[s] high-interest accounts to fund real estate loans, [and] may give consumers the false impression that their money is as safe as a deposit at an FDIC-insured bank." Mr. Brown expressed concern that the company's "business model may rely heavily on unadvertised risky investments, such as loans to real estate speculators and distressed borrowers, which could leave Tellus customers vulnerable to losses or without access to their money."

Senator Brown also said that it appears that Tellus may be falsely touting partnerships with FDIC-insured banks.

Mr. Brown asked Tellus to provide by May 16, 2023, information regarding:

• services offered by Tellus to customers;
• policies and procedures to protect customer funds should Tellus become insolvent or go bankrupt;
• Tellus’s approach to assessing risk when making determinations as to real estate loans;
• the nature of Tellus’s partnership with JPMorgan Chase and Wells Fargo, if it exists; and
• measures taken to ensure customers understand that Tellus is not FDIC-insured.

In a separate letter to FDIC Chair Martin J. Gruenberg, Senator Brown urged the FDIC to (i) "take a closer look" at Tellus’s business practices and risk management procedures and (ii) take further action if necessary to protect consumers.