Is Lanistar a scam?

Posted on November 20, 2020 by Jonathan Symcox

Lanistar founder Gurhan Kiziloz

Lanistar founder Gurhan Kiziloz

Update: The FCA subsequently withdrew its warning following changes made by Lanistar

London FinTech Lanistar hit the headlines this week after the Financial Conduct Authority labelled it as a potential investment scam.

The company, which is targeting millennial and Gen Z users, is yet to launch its polymorphic payment cards. The company claims this Volt card can be linked to up to eight bank cards, with users swapping between them using a unique keypad, which generates PIN and CVV2 codes which expire after one use.

It launched apps this week on the Google Play Store and Apple App Store, with the cards set to launch in January.

Within the app, users can monitor activity across all of their payment methods, change the payment card used up to seven days after a payment was made, set financial goals, and round up and split payments.

A partnership with Mastercard means that, in theory, users will be able to make payments around the world, translating into multiple currencies. Payments issuer processor Global Processing Services was the latest FinTech partner announced this week.

Influencer backing

The company is now backed by more than 3,000 influencers, including footballers Kevin De Bruyne, Karim Benzema, Paulo Dybala, James Rodriguez and Luis Suarez; boxer Tommy Fury; and celebrities Chris Hughes, Demi Rose and Georgina Rodriguez.

In launching a waitlist this week for the cards, Lanistar said it had “unleashed a coordinated marketing campaign across social media platforms worldwide”.

The brand aimed to rack up a billion unique social media impressions on just the first day. However commentators pointed out that some of these influencers had broken advertising rules by not labelling their posts as promoted content.

Investment collapse

Gurhan Kiziloz founded the business last year after experiencing disappointment with the tools provided by the high-street banks to manage his money.

In announcing £15 million investment from Milaya Capital in July – which reportedly valued the business at £150m – he told BusinessCloud that his aim was to build a £1 billion business through aggressive user acquisition [as well as] great and scalable customer service”.

However, three months on, Lanistar’s PR representatives contacted BusinessCloud to request that we change the story to remove all reference to Milaya Capital and say instead that “family members of CEO, Gurhan Kiziloz” had provided the investment.

They also requested that the below quote be removed attributed to Yasam Ayavefe, founder and CEO of Milaya Capital.

“I am always on the lookout for the next big thing in the world of technology, but more importantly, we also want to support and invest in ideas that will simplify and benefit people’s lives.

“This is exactly what Lanistar will provide. The technology underpinning Lanistar’s product is the future of personal finance, and I believe that it will go on to change our lives forever, by letting us streamline our finances.

“We’ll support every step along the way, with high-class mentors and a strong community of founders in the FinTech environment.”

Global workforce

Lanistar claims to employ more than 400 staff across its offices in London – where it is headquartered – Macedonia and Athens.

Its Athens office, which acts as the company’s compliance hub, opened in October, while the Skopje base is focused on customer services.

FCA scam warning

Regulator the FCA issued a warning to would-be investors in Lanistar this week, stating that the firm is providing services or products without authorisation.

“This firm [Lanistar] is not authorised by us and is targeting people in the UK. Based upon information we hold, we believe it is carrying on regulated activities which require authorisation,” it said.

“Almost all firms and individuals offering, promoting or selling financial services or products in the UK have to be authorised by us. However, some firms act without our authorisation and some knowingly run investment scams.”

Lanistar responded: “Lanistar is aware of the notice in respect of Lanistar which has appeared on the website of the Financial Conduct Authority and related press stories.

“Legal and regulatory compliance are central to Lanistar’s business and we confirm that we are not providing financial services or products without the FCA’s authorisation.

“We have announced our intended future services and we will be partnering with firms that are authorised by the FCA to provide financial services or products.

“We are in the process of contacting the FCA to clarify the position and will be requesting that the Notice is removed.”

Expert analysis

David Brear, CEO of financial technology consultancy and services provider 11:FS, told BusinessCloud that the FCA’s approach was valid.

“I think the FCA has stepped in quickly after concern from the industry and customers about the conduct of an organisation,” he said. “I would much rather this situation where we have a responsive regulator that steps in to understand whether things are being done accordingly to their expectations than wait until people’s finances and lives more broadly have been impacted and look to restore the situation.

“It seems Lanistar is a long way away from being a fully-fledged financial services player and I question significantly their approach to paying influencers who don’t have anything to do with their product to pretend to be fans. That type of approach can only lead to a bad place.

“[As for] the product… for me, innovation on cards is like putting spoilers on old cars. It feels like as an industry we are moving much further beyond these primitive tools so it will be interesting to see if they find a real customer base for this.”

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