TikTok Ads for Payday Loans: Part 2
We left a lot unsaid last time.
In our previous post, I dove into a new type of app that offers interest-free, no-fee “cash advances” as a way to tie users over to their next paycheck. At face value, this seems like a good product. But once you dig deeper, this cash advance is structured an awfully lot like a payday loan.
Today’s post is about Klover, an app that offers these cash advances but with a twist.
First, let’s talk about Attain
Attain is a company that isn’t consumer-facing like those apps from Part 1. It isn’t a bank or a lender of any kind. It’s a tech startup that helps big companies like McDonalds, Uber, and HBO understand trends around where & how consumers are spending their money. According to Attain’s website, their platform gives “real-time commerce data across all verticals, retailers, and purchases.”
Here’s what that platform looks like:
Products like this already exist. In the CPG space, companies invest heavily in IRi (now called Circana), which tracks what products are bought from individual retail stores over time (this is called “scan data”). Nielsen has a similar product, but perhaps more famously they conduct live user-ratings for television. These data aggregators have a wide distribution of geography & types of products, but the data has a lag time between when the transaction happens and when the data is available in the platform.
It looks like Attain has found a way to compete by connecting near-real-time data into a new platform.
This company doesn’t seem like it has anything to do with cash advances, though. Why are we talking about it?
Klover, or the app that wants your data
First, let me explain how these cash advance apps operate. They all advertise cash advances up to a certain amount (typically $200 or $250). But as a first-time borrower, you don’t actually get access to that amount right away. They start you out lower, usually around $50. After demonstrating you can pay $50 back on-time, they’ll bump your limit up to something like $100, then again after more & more success. Users pay a monthly fee to access the platform and grow their credit limit by remaining a consistent customer.
Klover does something different. It uses a points system that incentivizes users to disclose information about their financial habits. According to their website, earning 200 points increases your cash advance amount by $5. The business school terminology for this is “gamification” where they make a game out of sharing your data in exchange for access to financing.
They are replacing the monthly fee & repayment requirements of the original budgeting app model with no monthly fee, ads for other products, and consistent data-sharing.
Why is their app so different?
At face-value, it doesn’t look like Klover actually does anything with this data, so why are they incentivizing users to share it? The key to understanding this clearly lies with some connection to user data, but they make almost no mention of how they use it. Who uses the data? The answer must lie in the parent company.
The website does a good job of obfuscating Klover’s true ownership. But if you go to the careers page, it takes you to this jobs board for a completely different company which owns Klover. The jobs listed are typical software engineering jobs (mostly frontend & mobile development) and a surprising number of data engineering & data science positions. So now we have a whole new company to research.
As it turns out, Klover is owned by Attain, the data aggregation platform.
Let’s recap what we know so far.
We know Attain has a platform that aggregates real-time transaction data, packages it into a user-friendly platform, and sells access to big companies to make data-driven decisions.
We also know Attain owns a consumer-facing app that incentivizes users to share their data freely, in exchange for higher credit limits.
Has Attain figured out a clever way to populate its platform with real-time data without actually paying for it?
Personally, I don’t think it’s good or bad. It’s a clever business solution to obtain access to a large pool of data which typically comes at a high price & significant time-lag. It certainly highlights something important, though: your data is valuable. This whole connection highlights how consumer data is becoming the currency of the future, so you should treat your data just like currency.
Here’s some helpful things to think about:
Don’t give away your data for free (like your money!)
Be wary of companies that ask for your data without offering much in return
Like investing, if it seems too good to be true, there’s probably a catch
When someone uses Klover, they are essentially selling their data. Klover isn’t paying people for the information they fork over; they’re just letting users borrow money, which users have to pay back within 7 days. There is an alternative to the borrowing – users can cash out points for an Amazon gift card, at a rate of 500 points per $1 (much lower than the cash advance rates).
How much is your data worth?
Just as a thought experiment, let’s try to figure out how much Klover will pay you for data. We know Klover adds $5 to your credit limit for 200 points. Alternatively, you can redeem an Amazon gift card at a rate of $1 for every 500 points.
Here’s a screenshot from their website that outlines different ways you can earn points:
They’re incentivizing users to do things like scan receipts, connect debit cards to the app, share their location, and more. Also embedded in the app are ads for other financial services like investing with Acorns or switching to Savvy for your car insurance.
Here’s a list from Klover’s website with other methods to earn points:
10 points for sharing your gender
10 points for sharing your level of education
150 points for watching 20 ads on the platform
200 points for scanning & recording 10 receipts from recent purchases
Let’s say you want to pull cash out directly via the Amazon gift card. Using the 500 points : $1 rate, that means each scanned receipt is worth FOUR cents. Connecting your gender or level of education is worth TWO cents.
You need to watch more than 66 ads to earn a dollar.
Even if each ad were 15 seconds, that’s over 16 minutes of raw, unfiltered capitalism straight to the brain. I can’t begin to describe how little I would want to endure that.
Wrapping Up
Klover and its parent company, Attain, are certainly doing something new & interesting with their connected products. Klover offers a valid alternative to payday lending, and it’s cheaper than other apps thanks to its points system. It reinforces my earlier point, though, that personal data is becoming the internet currency of the future, and you need to be careful not to undervalue your data.
Your data is more than just binary code; it's a reflection of your habits, preferences, and ultimately, your identity. Protect it with the same vigilance you would protect your wallet. Attain surely makes a generous profit off of customer data, largely because of the small payouts it gives to its users (16 minutes of ads!!).
Thank you for following along. I’m excited to discuss even more in part 3, coming soon.