MrBeast’s TV show criticized for partnering with loan app on $4.2M US giveaway

MrBeast’s ambitious reality show, which the YouTube megastar hopes will expand his giant online reach and turn the corner on recent controversies, is already raising questions from consumer advocates over a partnership with a fintech company.

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Prime Video’s Thursday premiere of the record-setting Beast Games capped off a tumultuous year for Jimmy Donaldson and his production company. Shortly after reaching never-before-seen YouTube subscriber totals, MrBeast began facing heightened scrutiny over past “inappropriate content,” the channel’s philanthropic efforts, its workplace culture and allegations of dangerous on-set conditions that Donaldson has denied.

As MrBeast’s loyal following tunes in to watch 1,000 contestants compete for $5 million US on Beast Games, they are invited to scan a QR code during the show for a shot at winning their own life-changing money. It’s a $4.2 million US sweepstakes run by fintech company MoneyLion, an app that sends cash advances — often for a fee to workers living paycheque to paycheque.

The collaboration is billed as a way for MrBeast, who has sought to regain brand trust in recent interviews with alternative media personalities, to give back to his fanbase while presenting them with MoneyLion’s personal finance tools. But consumer advocates warn MoneyLion’s early payments — which are also promoted to giveaway entrants — operate as payday loans that could trap needy users in earnings-depleting borrowing cycles with additional fees.

Payday loans put people in ‘debt trap’: watchdog

Watchdogs find that those services are not recommended for younger audiences, making it an unusual partner for MrBeast to introduce to his persuadable fandom.

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“These types of high-cost, fintech payday loans, wrapped up in fancy apps, just put people in a debt trap where they have to borrow this week’s pay to pay last week’s loan and sets them back in their financial goals,” said Lauren Saunders, a director at the National Consumer Law Center who specializes in small-dollar lending.

Beast Games, which was partly shot in Toronto, marks Donaldson’s crossover into television entertainment. The North Carolina native has already captured online attention spans with his highly produced, fast-paced YouTube videos that often feature absurd stunts and massive cash sums; “Beat Ronaldo, Win $1,000,000” recently pitted professional athletes against amateurs in their respective sports.

He’s now testing the broad appeal of those viral spectacles with a competition series that promises “nail-biting, physical, mental and social challenges” similar to Netflix’s fictional survival drama Squid Game. The $5-million prize is believed to be the largest in reality television history and Donaldson posted recently that he spent $14 million US alone “building a city in a field” for the contestants.

MoneyLion’s partnership will bring “fans closer to the action than ever before,” according to a company press release. Over 1,000 prizes will be awarded to MoneyLion accountholders across eight drawings over the next year. Additional entries can be earned through daily log-ins on the MoneyLion app, where users are promised exclusive, behind-the-scenes content from the series. Consistent with sweepstakes law, participants must be legal U.S. residents ages 18 or older.

Upon entering the giveaway, a popup asks, “Want more ways to get money?” with an invitation to borrow money through MoneyLion’s loan services. Consumer watchdogs say cash advancements can come with steep costs despite casting themselves as “no interest” loans.

Users must pay a sliding “turbo” fee to get their “Instacash” advancements “within minutes” instead of waiting the two to five days that MoneyLion estimates it would otherwise take to hit an external chequing account. The company charges $8.99 US for the maximum advance of $100.

Research finds app users experience more overdrafts

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That makes MoneyLion one of the “more expensive options in this market,” according to Center for Responsible Lending senior policy counsel Andrew Kushner. Considering the products are geared toward cash-strapped people who need money now, Kushner said most users end up paying the fees.

These apps create a “cycle of borrowing” as financially vulnerable users try to keep up with the “extremely high cost of the loan relative to the size,” according to Kushner.

The Center for Responsible Lending found that users of these apps experienced a 56 per cent increase in chequing account overdrafts. Borrowers who use these “earned wage access” services withdrew 36 times a year, according to a 2021 California Department of Financial Protection report. A 2022 Consumer Financial Protection Bureau lawsuit alleges that MoneyLion misled users to believe they could easily end monthly memberships necessary to access some instalment loans but then refused to cancel those with outstanding loans.

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A representative for MrBeast declined to comment.

In an emailed statement, a MoneyLion spokesperson said the company pairs financial tools and products to support “long-term financial health and stability” — all of which will be promoted to Beast Games Giveaway participants. MoneyLion said it will “continue to collaborate with regulatory bodies” including CFPB, according to the spokesperson, and focus on ensuring its products are “accessible, fair and designed to create the best outcomes for our customers.”

Its “Instacash” fees are “clearly disclosed,” the spokesperson wrote, and the service helps workers “break the traditional payroll cycle” to “meet unexpected financial obligations.”