Bilt Users Revolt Over Rocky Transition
Tomo Seeks to Silence Critics with Baseless Lawsuit, OIG Report on Pulaski, CCCA Resurfaces, Revolut Files for U.S. Charter, Kraken Gets "Skinny" Master Account
Hey all, Jason here.
I had a lovely week or so at the beach here in Mexico, before taking a two-day road trip back to Mexico City. Looking forward to spending some additional time in and around the area, before returning home to the Netherlands.
Sadly, I won’t be making it to spring conferences like Fintech Meetup this year, so, if you were hoping to catch up with me there, feel free to drop me a line, and we can find a time to chat.
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TomoCredit Seeks to Silence Critics with Baseless Lawsuit
TomoCredit, which has also operated under the trade names TomoBoost and TomoIQ, has filed a lawsuit against me personally in the U.S. District Court for the Northern District of Illinois (note: this newsletter is published by 312 Global Strategies BV, a Dutch entity based in and governed by the laws of the Kingdom of the Netherlands.)
According to the company’s complaint — which is entirely without merit and suffers from fatal procedural and substantive flaws — the “case arises from a calculated and malicious campaign by Defendant Jason Mikula to destroy TomoCredit’s business through a barrage of false, misleading, and defamatory statements.”
Per TomoCredit, “The consequences of Mikula’s vendetta have been swift and devastating. Within days of his most recent defamatory publication, two of TomoCredit’s major vendors terminated their relationships with TomoCredit. Moreover, a key business affiliate specifically cited Mikula’s article as the reason it would not renew its partnership with TomoCredit.”
TomoCredit’s complaint describes Fintech Business Weekly’s prior reporting as false, without providing meaningful evidence to support its conclusions, and asserts that “TomoCredit is a legitimate business that has demonstrably helped customers improve their credit scores through proper means.”
TomoCredit, represented by Philadelphia-headquartered Blank Rome in the lawsuit, has engaged in a pattern of seeking to abuse the legal process for its own benefit.
The company’s “lawfare” tactics have included sending a cease and desist letter to Forbes over similar reporting (while Forbes added a response from the company, it did not materially change the existing content of its article), engaging in a drawn out trademark dispute with Prism Data over TomoCredit’s use of Prim’s “CashScore” mark, before reneging on an agreed upon settlement in that dispute (a judge largely ruled in favor of Prism Data’s motion to enforce the settlement agreement), and TomoCredit’s attempt to wrestle the tomo.com domain name away from the mortgage company that currently holds it through a WIPO dispute process that TomoCredit ultimately lost.
In its suit against me, personally, TomoCredit is asking the court to require me to “remove, delete, and destroy any defamatory statements in [my] possession, custody, or control regarding TomoCredit,” including previously published articles and social media posts.
TomoCredit is also seeking “no less than $1,000,000” in actual damages, plus punitive damages in an amount to be proven in court.
Fintech Business Weekly remains dedicated to covering fintech, banking, and crypto without fear or favor, and will not be intimidated by baseless lawsuits like this one.
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Bilt Users Revolt Over Rocky Transition
The economic viability of offering credit card-style rewards on rent payments was always, to put it charitably, dubious.
The rich incentives offered by popular rewards cards like Chase’s Sapphire Reserve and American Express’ Platinum card are funded largely from interchange, which, in turn is passed along as the largest component of the “swipe fee” that merchants pay to accept card payments (yes, there is an argument that interest paid by those who revolve card balances also helps fund rewards programs in card portfolios where many high spenders don’t carry a balance.)
While the interchange rate and, by extension, the merchant discount rate vary by the type of card used, the average rate is around 2.5% to 3%, and many merchants pay a “blended” rate, where the cost of accepting any card is charged at the same rate. For example, Stripe’s standard pricing for card-not-present transactions in the U.S. is 2.9% plus $0.30, regardless of the type of card used.
These rates are substantially higher in the U.S. than most all other markets and have been a perennial point of friction between merchants, networks (Visa, Mastercard, Amex), and card issuers.
While most all day-to-day merchants grudgingly accept these fees as a cost of doing business, some, particularly those consumers can’t easily choose an alternative to, often require or incentivize consumers to make payment using a less expensive method. Types of merchants in this category include lenders, utility companies, and landlords and mortgage services.
These billers might accept card payments, but with a surcharge or “convenience fee” that covers (or more than covers) the merchant discount rate.
A typical consumer unfamiliar with the nuance and complexity of the U.S. payments reasonably might wonder, why can’t I pay my rent with my credit card to earn points?
Offering rewards points on rent and, with the launch of it’s “2.0” offering, on mortgage payments is the alchemy Bilt offers consumers.
Bilt launched in 2021, originally partnering with Evolve Bank & Trust (yes, that Evolve.)
But Bilt, quickly growing thanks to its unique offering of points on rent, landed a $60 million growth round announced in September 2021, including investment from Wells Fargo. Bilt transitioned bank partners and officially began issuing cards via its relationship with Wells Fargo in March 2022.
But, according to extensive reporting on Bilt’s relationship with Wells Fargo, economic assumptions the bank made when agreeing to partner with Bilt were fatally flawed. Reporting from the Wall Street Journal in 2024 revealed:
Wells Fargo assumed 65% of Bilt card spend would be non-rent, but, in reality, only about 35% was;
The bank believed that cardholders would revolve between 50% to 75% of card spend, but only revolved around 15% to 25%;
Wells Fargo viewed the program as an opportunity to cross-sell mortgage to Bilt cardholders, who tend to skew higher-income;
The Bilt program experienced abnormally high fraud losses, due to errors in how card numbers and expiration dates were generated;
How Bilt facilitated rent payments posed money laundering risks that needed to be remediated;
Wells Fargo paid Bilt $200 for each new card account and, about six months after the launch of the partnership, the bank began paying Bilt about 0.80% of each rent payment, even though Wells Fargo wasn’t earning interchange payments on these transactions.
The upshot was, according to the Journal, that Wells Fargo was losing as much as $10 million per month on the program.
While the partnership between Bilt and Wells Fargo was originally supposed to continue until at least 2029, in July 2025, the bank announced the partnership would wind down early, with Wells Fargo-issued Bilt cards sunsetting on February 6th, 2026.
Faced with the loss of the bank partner issuing its cards — and, implicitly, subsidizing the rich rewards it offers — Bilt announced a slate of new cards with new benefits, dubbing it “Bilt 2.0.”
The new cards, powered by issuer-processor Cardless and sponsor bank Column, include the no-annual-fee Bilt Blue Card, the $95 per year Obsidian Card, and the $495 per year Palladium Card.
According to the company, all earn 4% back in “Bilt Cash,” let cardholders make rent and mortgage payments with no transaction fee, and offer an introductory 10% APR for the first year on new eligible purchases.
Bilt also promised existing cardholders a “seamless” transition from their existing Wells Fargo-issued cards to the new Bilt 2.0 cards issued by Column.
According to the company’s documentation, if users chose a new Bilt card by February 1, 2026:
they would keep their existing card number, and, if they used Apple Pay or Google Pay, details would update automatically;
users would not see a hard inquiry on their credit report tied to the new card/credit line, though the new card would begin reporting as a new tradeline;
users might get the option to transfer any outstanding from their Wells Fargo card to their new Column-issued card, with Bilt working with Wells Fargo to close the old account.
Bilt users who chose to keep their existing Wells Fargo account open would receive a new Wells Fargo Autograph card and could continue to manage any outstanding balance via the banks website and app.
Users who had an outstanding balance at Wells Fargo, didn’t have the balance ported to their new Bilt card, and didn’t opt to receive a Wells Fargo Autograph card could only manage that balance through Bilt until February 6th. After this date, according to Bilt’s site, users would need to “make payments directly to Wells Fargo by calling 1-833-404-2272 or visiting wellsfargo.com.”
How cardholders’ rent payments are handled under Bilt’s new approach also changed significantly.
In Bilt’s original incarnation with Wells Fargo, rent payments were charged against a user’s credit line, giving them a month of float to choose when to pay down the charge. While many users opted to pay down their rent charge more or less immediately, others used the flexibility to effectively split their rent into multiple payments.
Bilt Users’ Housing Payments Pooled in FBOs At Column, Evolve Bank & Trust, According to Company’s Terms and Conditions
As anyone who has managed transitioning a card program from one bank sponsor/issuer processor to another knows, it is an extremely complicated affair. This is even more the case for credit vs. debit cards, where cardholders may have outstanding balances and more regulations, like the CARD Act and the Truth in Lending Act, apply.
While Bilt promised cardholders a seamless transition — and, for some, even many, it probably has been — users have flooded social media sites like X and Reddit with a litany of complaints, including:
Users who were declined for the new card or received a credit limit substantially lower than they had previously;
What users viewed as an excessively complicated rewards earning and redemption structure;
Users experiencing declined transactions and frozen cards, including during a promotional period when Bilt was offering a higher rate of points on certain transactions;
Users who claim outstanding balances were transferred from Wells Fargo to the new cards without their permission;
Users who complain they’ve experienced difficulties making payments on outstanding balances still held at Wells Fargo;
Users who claim they received a new Wells Fargo Autograph card they didn’t want or authorize;
Users who say older statements they needed for financial tracking/planning and tax prep disappeared from the Bilt app;
Users who believe they should have qualified for a special promotion offered if they signed up for Bilt 2.0 through a link on The Points Guy website, but didn’t;
Users who reported difficulty in linking bank accounts to Bilt;
Users who reported not receiving their physical Bilt card or receiving it with incorrect/incomplete details printed on the card;
and, perhaps the issue that has driven the most frustration and outrage, issues with rent and mortgage payments not being made, being delayed, or bouncing, with some users reporting their external bank account had been debited by Bilt, but the corresponding payment was never made to their landlord or mortgage servicer.
Adding insult to injury, users seeking customer support are primarily directed to an AI chatbot that, according to widespread social media complaints, is woefully lacking. Users seeking to connect with a human support agent are complaining of multi-day wait times or no response at all.
The new structure of how rent (and now, in Bilt 2.0, mortgage payments) are handled raised some eyebrows among those familiar with the consumer protection regulations that apply to credit cards, specifically, the CARD Act.
The CARD Act requires issuers to mail or deliver a statement at least 21 days before a cardholder’s payment due date. How can Bilt 2.0’s structure of more or less immediately debiting a user’s external bank account for a rent or mortgage payment be compatible with this requirement?
A look at Bilt’s terms and conditions offers some context. According to its terms, Bilt “may make available” a “payment account” to users, with two underlying banks providing such accounts: Column, the same bank that serves as Bilt’s card issuing partner, and Evolve Bank & Trust.
Instead of users’ rent being charged against their credit line and then repaid during a normal statement cycle, users appear to be moving funds to a transaction account established for their benefit — an FBO account — at either Column or Evolve.
Yes, per Bilt’s terms and conditions, it appears to be pooling users’ rent and mortgage payments at Column as well as at embattled Evolve Bank & Trust — the bank at the center of an ongoing battle over $95 million in missing customer deposits, that was hacked by a Russian cyberransom group, and whose bank holding company is behind on debt coupon payments because it is functionally insolvent.
While the use of this shadow “payment account” structure could, depending on the exact flow of funds, enable Bilt to process rent and mortgage payments without the transactions technically hitting a user’s credit line — thereby avoiding the consumer protections afforded by the CARD Act and TILA — such transactions still appear in a user’s list of transactions within the Bilt app.
And, for users opting to pay via Venmo, the way Venmo and Bilt display the transaction certainly make it appear like it is a credit card payment that Bilt is then immediately drawing repayment for from a user’s external linked bank account, potentially in violation of the CARD Act.
The use of this convoluted shadow “payment account” structure and, potentially, Evolve’s history of operational problems may help explain why some users are experiencing delayed, duplicate, or returned housing payments.
Asked about users’ numerous issues and complaints, a Bilt spokesperson said via email, “Our members are our number one priority — full stop. We are committed to delivering for them and will continue to work tirelessly to ensure we do.”
Everything Else: OIG Report On Pulaski Failure, CCCA Resurfaces, Revolut Seeks U.S. Banking Charter (For Real This Time), Kraken Gets Fed Master Account
Last week, the Office of the Inspector General of the FDIC released its in-depth review of the failure of Chicago-based Pulaski Savings Bank. The bank’s failure cost the deposit insurance fund approximately $28.5 million.