Troubled neobank Aspiration is in the midst of a legal battle with fraud prevention platform Socure, with the former suing the latter over a $4 million bill for services that Aspiration believes were inadequately delivered. The suit alleges that Socure leaned on personal gifts and lavish benefits provided to Aspiration’s former chief administrative officer, Deepak Kumar, to secure a lucrative contract renewal. Kumar denies these allegations, calling them “nonsense.” Meanwhile, Socure has refrained from commenting on the pending litigation but remains prepared to defend its position in court.
Since its launch in 2013, Aspiration has attracted investments from big-name backers like Leonardo DiCaprio, Drake, Robert Downey Jr., and Steve Ballmer. The company was set to go public via a SPAC deal in mid-2021, which would have brought in over $400 million in funding and valued Aspiration at $2.3 billion. However, the market shift in fintechs and SPACs led to a stalled growth trajectory for Aspiration. Eventually, the neobank began focusing on carbon credit sales rather than consumer banking, resulting in massive layoffs and executive turnover by 2023. Today, Aspiration’s consumer business is managed by Mission Financial Partners, and it markets carbon credits under the brand Catona Climate.
The lawsuit, filed in April 2023, details Aspiration’s dissatisfaction with Socure’s performance over the years. Allegations include underperformance of fraud prevention services, with only 31% of total threats being captured compared to the 95% reduction promised by Socure. As the contract renewal approached in late 2021, Aspiration claims that Socure pushed for upgrades and additional features to improve performance, despite continued dissatisfaction from the neobank. A particularly contentious point was the added annual minimum provision in the contract, which required Aspiration to pay $2.2 million in the first year and $2.6 million in the second year, regardless of service usage.
Despite ongoing payments to Socure, Aspiration was billed an additional $1.5 million in December 2022 to meet the annual minimum provision outlined in the contract. Following layoffs in April 2023, Aspiration terminated its contract with Socure, leading to a final bill for the entire $2.6 million annual minimum due to discontinued platform usage. Aspiration agreed to pay for services used through April 2023 but disputed the annual minimum charges based on the platform’s effectiveness. Socure cited a contract clause stating no warranties on service effectiveness in response to Aspiration’s complaints. This legal dispute adds to the ongoing controversies surrounding Aspiration, including investigations into its carbon credit practices by government agencies.
Aspiration’s mission to operate as an environmentally-conscious neobank, with features like rounding up purchases for tree-planting donations, has garnered both support and scrutiny. The company’s recent focus on carbon credit sales marked a strategic shift from traditional banking operations, leading to executive departures and operational changes. Despite these challenges, Aspiration continues to navigate the fintech landscape under new management, aiming to provide consumers with sustainable financial solutions amidst legal disputes and regulatory scrutiny. The outcome of the lawsuit against Socure is yet to be determined as both parties prepare to defend their positions in court.
