Author Topic: Betterment Opening New Accounts without Customer Permission  (Read 2740 times)

Another Reader

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Betterment Opening New Accounts without Customer Permission
« on: August 16, 2018, 06:03:04 AM »
I opened up Personal Capital today to look at my accounts and to my surprise found a NEW Betterment account under investments called "Smart Saver.".  Going to the Betterment website, I verified that this account exists, along with exhortations to "put cash to work."  Compared to their 1.78 percent, I can easily get more "work" out of my cash with little risk from on-line savings accounts and buying short term treasuries at auction through Fidelity or another broker.

I put a small amount of money in Betterment as an experiment several years ago, mainly to see if a robo adviser added any value to my investing.  So far, my conclusion is "meh."  I did not ask Betterment to open this new account.  I do not understand how Betterment can open accounts in customers' names without their explicit permission.  Even worse, how can they not tell their customers in advance they intend to do this?

I understand that it is difficult to close a Betterment account from posts here and in other forums.  The nannies at Betterment know what's best for you and make leaving difficult.  I have a taxable account and they will not transfer in kind.  There will be tax consequences to get away from these people.

The e-mail to customer service has been sent.  Kill the account with no reporting consequences to me, or I will close my account. 

shinn497

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #1 on: August 17, 2018, 07:55:10 PM »
I haven't noticed a new account. Interesting.

The thing about their "accounts" is that they are more just ways of organizing the securities you have with them. You can open aribituary accounts with them but it doesn't change your total holding. I don't think they would withdraw money without your permission.

Anyway, I use them for my main bread and butter retirement and i love it. I do have a savings account with barclays that I use for small savings goals (like 1k or something). For anything larger I use betterment's major purchase feature.

I really don't think about investing with them in terms of returns though. They are all about behavioural finance, and that is what I like. If anything I use their service more to organize my goals than actually invest. The one notable exception is my actual retirement account, which i put into 100% securities against their advice. Because yolo

ILikeDividends

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #2 on: August 17, 2018, 08:04:50 PM »
Apparently they took a page right out of Wells Fargo's playbook.

Perhaps Betterment's CEO should ask Wells Fargo's ex-CEO what it felt like to have $69 million of his golden parachute clawed back for doing essentially the same thing.

https://www.nytimes.com/2017/04/10/business/wells-fargo-pay-executives-accounts-scandal.html
« Last Edit: August 17, 2018, 08:15:27 PM by ILikeDividends »

shinn497

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #3 on: August 17, 2018, 09:32:06 PM »
I mean i don't think they have done anything fraudulent or unethical and i dont think they will. They are one of the biggest supporters of ethics and customer interest than any business. But hey who knows really.

ILikeDividends

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #4 on: August 17, 2018, 09:45:50 PM »
I mean i don't think they have done anything fraudulent or unethical and i dont think they will.

Putting someone's name and social security number on a financial account without their explicit permission sounds unethical (at the very least) to me.  If it quacks like a duck, and all that stuff.  I suppose reasonable people can disagree about that.

But the congressional hearings took a very dim view of Wells Fargo doing it.

They are one of the biggest supporters of ethics and customer interest than any business. But hey who knows really.

That was Wells Fargo's sales pitch too; until they got caught.  Actually, it's still their sales pitch.  Go figure.
« Last Edit: August 17, 2018, 10:05:16 PM by ILikeDividends »

Another Reader

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #5 on: August 17, 2018, 09:52:56 PM »
The response that I received was not acceptable.  The customer service person said I could go to the website and dismiss the "goal."  Not cancel the account, "dismiss" it.  Great.  I can hide an account Betterment created for me from me.  I don't think so.  I asked again to have the account deleted.

ILikeDividends

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #6 on: August 17, 2018, 09:58:56 PM »
The response that I received was not acceptable.  The customer service person said I could go to the website and dismiss the "goal."  Not cancel the account, "dismiss" it.  Great.  I can hide an account Betterment created for me from me.  I don't think so.  I asked again to have the account deleted.

My suggestion probably won't help the situation, but just for grins, you might consider finding out where Betterment is headquartered, and call their local newspaper and explain what you are experiencing to a reporter.  For good measure, throw up a review on Yelp.com, when you're on hold while Betterment gives you the run-around.  Can't hurt.  It's at least something productive to do.
« Last Edit: August 17, 2018, 10:09:43 PM by ILikeDividends »

Another Reader

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #7 on: August 17, 2018, 10:05:34 PM »
The response that I received was not acceptable.  The customer service person said I could go to the website and dismiss the "goal."  Not cancel the account, "dismiss" it.  Great.  I can hide an account Betterment created for me from me.  I don't think so.  I asked again to have the account deleted.

My suggestion probably won't help the situation, but just for grins, you might consider finding out where Betterment is headquartered, and call their local newspaper and explain what you are experiencing to a reporter.  For good measure, throw up a review on Yelp.com, when you're on hold while Betterment gives you the run-around.  Can't hurt.  Something productive to do.

I simply sent back a demand that they close and delete the account, with no further consequences to me.  We will see on Monday how they deal with the request.

shinn497

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #8 on: August 17, 2018, 10:16:01 PM »
I think, though, that their website 'accounts' are actual legal entities. Like your money is stored in the an actual account regardless and what you see on the website is just a way of organizing thing.

But I dunno guys you seem to be a bit melodromatic about this. they aren't taking money, just maybe it could be a technical difficulty? I am just giving them the benefit of the doubt,

ILikeDividends

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #9 on: August 17, 2018, 10:24:36 PM »
I think, though, that their website 'accounts' are actual legal entities. Like your money is stored in the an actual account regardless and what you see on the website is just a way of organizing thing.

But I dunno guys you seem to be a bit melodromatic about this. they aren't taking money, just maybe it could be a technical difficulty? I am just giving them the benefit of the doubt,
I'm not quite sure where you see drama.  The OP thinks it's a real account.  You don't seem so certain that it's not a real account.  Betterment clearly wants you to use it to, "put cash to work."  So if you can't articulate how that is anything other than an account, or different than what Wells Fargo got slapped down for, as un-melodramatically as you prefer to do, then I'm afraid we'll just have to agree to disagree.

If it's some sort of "technical difficulty," their failure to mention that, their run-around tactics to blow off the OP's request, with no assurances of an acceptable remedy, while maintaining a vampire-like grip on the account the OP did open, suggests otherwise to me.  I don't give the benefit of the doubt to any company when their actions suggest they don't deserve it.


« Last Edit: August 17, 2018, 10:45:13 PM by ILikeDividends »

gerardc

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #10 on: August 17, 2018, 10:33:10 PM »
Could it just be sub-account or category inside your actual account (legal entity) ?

Kinda like Microsoft creating a folder in C:\Users\You\My Documents, or Chrome creating C:\Chrome\Downloads without your explicit permission. Creating a fraudulent folder in YOUR NAME without your express permission is fraud! They even encourage you to "put your documents in there". Maybe that folder is a legal entity? Maybe try harassing customer service so they'll delete it for you?

ILikeDividends

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #11 on: August 17, 2018, 10:38:45 PM »
Could it just be sub-account or category inside your actual account (legal entity) ?

Kinda like Microsoft creating a folder in C:\Users\You\My Documents, or Chrome creating C:\Chrome\Downloads without your explicit permission. Creating a fraudulent folder in YOUR NAME without your express permission is fraud! They even encourage you to "put your documents in there". Maybe that folder is a legal entity? Maybe try harassing customer service so they'll delete it for you?

It could be any number of things.  Me engaging in a guessing game with you as to what it might actually be would be pointless.  The fact that Betterment hasn't informed you or the OP of what it actually is, as a financial institution, would concern me greatly if I were doing business with them.

When Wells Fargo started acting like a mosquito, treating me like a food supply, I walked, and fast.  That was over 10 years before their games publicly blew up in their face.  Their customer service was very polite and friendly too; useless, but friendly and polite.  I was on a first-name basis with just about all of them before I got fed up and left.

But the story doesn't end there.  Years later I was my late uncle's executor for his estate.  All of his assets and accounts were with Wells Fargo.  I got the court order I needed to prove my role as executor, and I liquidated, transferred, paid off, and then closed all of my uncle's existing accounts (a complete list of which was provided to me by Wells Fargo).

In order to take over someone else's accounts, you need more than just a court order.  You need to present an official death certificate (not a copy) that Wells Fargo keeps for their records.  So Wells Fargo had all the certifications they needed to know that my uncle--their now ex-customer--is dead.

Acting as executor, at the post office I changed my uncle's mailing address to my own.  About 14 months later I got a statement for an account my uncle never had, but mailed to my actual address, not to my uncle's old address, and in my uncle's name, with a balance due for an annual fee.   And this was 6 months after the congressional hearings.

In California (where I live), an executor is personally responsible for settling all debts (including all taxes due in or before the terminal year) of the deceased, which can be covered by the deceased person's estate, before paying the beneficiaries of the estate.

Wells Fargo offers probate services, so someone there knows the California law.  I had already paid out the estate to all the beneficiaries.  Someone at Wells Fargo merged an executor's personal information with a deceased person's information, and created a new fee-bearing account with it.  So here is Wells Fargo trying to rip me off again, even after I fired them so many years ago, and even after they got caught.

The fake account was eventually closed by Wells Fargo, several months later, with a somewhat obtuse apology for "inconveniencing" me (actually addressed to my late uncle, though, not to me).  I figure that was probably right around the time they decided to pretend to clean up their act.

The "benefit of the doubt" has to be earned.  Giving it away on a lark or a hunch is just asking for trouble.
« Last Edit: August 18, 2018, 02:32:27 AM by ILikeDividends »

Another Reader

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #12 on: August 18, 2018, 07:28:41 AM »
There is an account number.  It's listed as 1 account of this type.

If it's not gone Monday, and they don't supply me with some justification based on permission granted that is buried in their account paperwork, the formal complaint(s) will follow.

Dr Kidstache

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #13 on: August 18, 2018, 11:30:13 AM »
How odd. I love Betterment. I remember getting an e-mail a while ago announcing their new Smart Saver account as a cash alternative but I certainly didn't have any new Goals appear. I hope they can satisfy your complaints quickly. Sounds like a bizarre glitch.

Another Reader

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #14 on: August 18, 2018, 12:49:25 PM »
How odd. I love Betterment. I remember getting an e-mail a while ago announcing their new Smart Saver account as a cash alternative but I certainly didn't have any new Goals appear. I hope they can satisfy your complaints quickly. Sounds like a bizarre glitch.

I understand they only did this to holders of taxable accounts.  The assumption likely was money in retirement accounts was fully invested and a cash account was not needed.  If you only have IRA's there, you did not get a Smart Saver account.

Dr Kidstache

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #15 on: August 19, 2018, 02:44:21 PM »
I have taxable accounts as well as IRAs with them. Just double-checked to make sure I don't have a phantom account!

aspiringnomad

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #16 on: August 21, 2018, 10:48:09 PM »
If you’re certain they’ve opened an account in your name without your permission, submit a complaint to the Consumer Financial Protection Bureau.

jc4

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #17 on: August 22, 2018, 09:46:35 AM »
3 Comments.

1. I LIKE betterment (have a small taxable acct.)
2. They definitely opened a smart saver acct w/o my permission / notice and it appears in Mint now.
3. I'll keep using betterment.

Another Reader

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #18 on: August 22, 2018, 11:53:24 AM »
My extremely skeptical/jaded view is that Betterment is one of many roboadvisories that is struggling with new customer acquisition cost, and this little maneuver is designed to show new account growth (even if they are essentially pointless/cosmetic accounts).  They want to get acquired, but without showing new account growth, the potential sale value of the company plummets.   

There is probably some truth to this.  You also want a new product you are rolling out to have a high adoption rate. to make it look successful.  Signing up some of your existing customers is one way to raise the adoption rate.

ILikeDividends

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #19 on: August 22, 2018, 01:49:41 PM »
My extremely skeptical/jaded view is that Betterment is one of many roboadvisories that is struggling with new customer acquisition cost, and this little maneuver is designed to show new account growth (even if they are essentially pointless/cosmetic accounts).  They want to get acquired, but without showing new account growth, the potential sale value of the company plummets.   
That would be fraud.

fraud
frôd/
noun
noun: fraud; plural noun: frauds

    1 wrongful or criminal deception intended to result in financial or personal gain.

    2 a person or thing intended to deceive others, typically by unjustifiably claiming or being credited with accomplishments or qualities.

gerardc

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #20 on: August 22, 2018, 06:55:07 PM »
My extremely skeptical/jaded view is that Betterment is one of many roboadvisories that is struggling with new customer acquisition cost, and this little maneuver is designed to show new account growth (even if they are essentially pointless/cosmetic accounts).  They want to get acquired, but without showing new account growth, the potential sale value of the company plummets.   

I'd be surprised if the acquiring company did not verify those things. Ok, only half surprised.

American business is a game of deception. Not creating value, but gaining revenue while inflicting pain to naive people. And of course, maintaining plausible deniability. That's really America in a nutshell.

jacoavluha

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #21 on: August 22, 2018, 09:28:58 PM »
OP so what’s the follow up?
Have you called and spoken with a human at Betterment? What did they say?

Another Reader

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #22 on: August 22, 2018, 09:36:26 PM »
It's going to have to wait until some other fires are put out.  They sent me an e-mail re-emphasizing how to hide the account.  The account is still there. 

jacoavluha

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #23 on: August 23, 2018, 08:35:54 AM »
Are you sure that it's a new and unique account, and not just a new and unique "bucket" in the platform? I previously had a Betterment account. On my statements there would be a page for INVESTING (Acct xxx) and another page for SAFETY NET (Acct xxx), and the account numbers were actually the same. These were just different "goals" or whatever Betterment called them, but I don't think I'd have considered them unique accounts.

Not saying right or wrong. Even if my guess is correct, perhaps Betterment should not be in the habit of adding a "goal" that you didn't authorize.

The fact that Personal Capital "thinks" this is a unique account at Betterment doesn't really mean anything.

toganet

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #24 on: August 24, 2018, 09:51:33 AM »
First off, quick disclosure: I work for a financial institution, specifically in the area of account opening. That being said, I'm speaking as a private individual, don't take my advice, etc.

What the OP has described here concerns me for a few reasons, though I suspect there is likely some nuance.  For example, the "account number" shown for this new account might be a sort of sub-account or other unique identifier, rather than an actual account.  What matters (somewhat) is whether this account has its own terms & conditions or other legal/regulatory features that the account holder would need to review and consent to, or whether it falls under the terms previously agreed to when they signed up for Betterment.

HOWEVER, even if Betterment is following all the rules & regulations, and even if they disclosed all of this up front, it could still be considered UDAAP (Unfair, Deceptive, Abusive Acts or Practices)and merits a call to the CFPB.

Sailor Sam

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #25 on: October 01, 2018, 10:11:47 AM »
Hey, @Another Reader, any follow up on your complaint to Betterment? I just noticed they opened a 'smart saver' account for me, too, and I'm some kind of pissed. It would be great to know if/how you reached resolution.

Another Reader

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #26 on: October 01, 2018, 12:15:30 PM »
Sorry, I got sidetracked with taxes and rental issues so I haven't pursued this.  I'm considering just transferring everything out in December and waving goodbye to the investment nannies.  Every time I open up Personal Capital, I'm annoyed to see that account number, though, so something must be done soon.

jacoavluha

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #27 on: October 01, 2018, 06:00:41 PM »
you could transfer it all in kind to M1 finance, then sell each position when best for you, under your control, with no trade fees. That's what I did. Just make sure that you know your cost basis, because M1 won't tell you what it is. Only whole shares can be transferred, so fractional shares left over will be liquidated.

HBFIRE

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Re: Betterment Opening New Accounts without Customer Permission
« Reply #28 on: October 01, 2018, 08:07:22 PM »
Wow, sounds like a horrible company to deal with.  Glad I read some of the negative comments in MMM's blog post about Betterment.   They pay out massive affiliate CPA's (even more than personal capital), which is why so many finance sites push them.
« Last Edit: October 01, 2018, 08:13:18 PM by dustinst22 »