Can Tally's Pivot to B2B Jumpstart Its Credit Card Payoff Business?
Plus, Ripple's CEO, walking a legal and business model tightrope, pops off on X.
Number of the Week: $785 million (explanation below)
Can Tally's Pivot to B2B Jumpstart Its Credit Card Payoff Business?
That credit card debt payoff app Tally has decided to pivot from a business-to-consumer (B2C) to a business-to-business (B2B) model is not surprising to those closely following the fintech debt management market, but it caught the San Francisco-based startup’s customers completely off guard, creating added financial stress that the app was supposed to alleviate, not complicate.
Tally, cofounded by CEO Jason Brown and Jasper Platz in 2015, raised $80 million in Series D funding in late 2022 that saw its valuation triple to $855 million. The round was led by Sway Ventures, with participation from Menora Mivtachim, Kleiner Perkins, Andreessen Horowitz, Shasta Ventures and Cowboy Ventures, and brought the company’s total funding to $172 million.
The app was intended to help consumers pay off higher-interest credit card debt by gathering their outstanding balances into a Tally dashboard, automating payments for multiple credit card accounts, and tapping the startup’s lower-interest lines of credit so that it could make payments directly on behalf of customers, who would then repay Tally in monthly payments. (Tally+ membership, which cost $300 annually, gave customers access to a larger credit line and monthly discounts for making on-time payments).
Yet by November 2023, customers began reporting that they received an email from Tally that stated: “We’re sorry to let you know that due to circumstances beyond our control we will no longer be able to make new credit card payments from your Tally line of credit, effective immediately. …Unfortunately, the investor that funded your account has informed Tally they will no longer provide funding for any accounts, despite Tally’s efforts to reach a different outcome.” Tally customers were also told that while the company would continue to support customers, it would not be making any future credit card payments on their behalf—transferring that responsibility immediately back to them—and that they would be responsible for repaying their remaining Tally balance, after which the company would close the customer’s account.
The news left some Tally customers confused and many others angry, sparking subreddit threads and complaints to the Better Business Bureau (BBB), almost all claiming “breach of contract” on Tally’s part. One Tally customer, who filed a BBB complaint, said that the notice from Tally came “with almost no warning before I had to pay my credit cards manually AND pay Tally's bill on top of that,” which was “an additional $600+.” Scroll through the complaints and a pattern of similar customer grievances is evident.