Jeff Kauflin is a senior editor who leads Forbes’ fintech coverage, covering everything from digital banking and investing to payments and insurtech. He co-edits Forbes’ annual Fintech 50 and also writes about crypto. Jeff joined Forbes in 2016 and works in New Jersey.
Tomo ’s CEO said it had received $100 million in loan commitments to fund its credit card, but it repeatedly missed payments and was hit with a lawsuit from Silicon Valley Bank.The loan default is another strange chapter in the saga of Tomo Credit, which has recently drawn hundreds of consumer complaints for making its subscription service hard to cancel.
But after receiving a tip from a reader, we learned that Tomo defaulted on a $30 million line of credit fromin early 2023, according to a lawsuit SVB filed in a New York state court, and that the startup subsequently lost access to its SVB funding. The missed payments to SVB were exceedingly strange given that, in July 2022, Tomo announced it had raised $100 million in debt financing and $22 million in equity investment from backers including Mastercard and Morgan Stanley.
In late September 2023, Tomo and SVB “ceased extending new credit for the credit card operations,” according to a sworn statement from Kristy Kim filed in the suit. In January 2024, Tomo paid SVB the $5.1 million it owed, according to court documents, and the next month, both parties agreed to dismiss the case. Jason Mikula, the publisher of Fintech Business Weekly, alsoLast week, Kristy Kim told us that Tomo still makes a credit card available to a “select” group of customers.
The loan default and confusion is another odd chapter in the saga of TomoCredit, which has been the target of afrom people who’ve had trouble canceling their Tomo subscriptions. As we reported earlier this week, over the past year consumers have filed 557 complaints to the Better Business Bureau about the startup, many of which focus on problems canceling the service.
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