Yotta Class Action Alleges Users Locked Out of Accounts, Denied Access to Funds

A class action lawsuit accuses Yotta Technologies Inc. and Evolve Bank & Trust of negligence and violations of federal law after a service disruption left users locked out of their accounts and unable to access their funds.

Consumers Affected: U.S. consumers who were unable to access their funds in their Yotta accounts due to the service disruption.

Court: U.S. District Court for the Southern District of New York.

Users of the fintech and gaming company Yotta are accusing the company of negligence and other violations of federal law in a new lawsuit after a service disruption in June left users locked out of their accounts and unable to access their money.

The lawsuit says that for some of the app’s users, Yotta is their only source of money and the disruption has left them “unable to spend or withdraw their funds from their accounts needed for the basic necessities of life, such as food, clothing, shelter and medicine.”

Yotta Users Locked Out of Accounts, Denied Access to Funds

Erika Baumgartner, Daniel Lopez, and Shaun Kramm filed the proposed class action against Yotta Technologies Inc. and Evolve Bank & Trust, which provides the banking services for the app. 

According to the lawsuit, Baumgartner, who has used Yotta since 2021, hasn’t been able to access her funds since June and needs the money to pay for the bills for her wedding in the second half of the year. 

Lopez has been a customer since 2023, and says the recent lack of access has caused him significant inconvenience and emotional distress. Same too for Kramm, who has used Yotta since 2000, and has had to borrow money from friends. “In addition to financial hardship, this has caused him embarrassment, inconvenience and emotional distress.”

The disruption that blocked users accounts happened when Evolve lost access to the “dashboard” of Synapse Brokerage, the app’s new banking partner, which meant the users’ accounts couldn’t be processed and the more than $112 million in Yotta couldn’t be accessed, according to the lawsuit.  

That outage could have been prevented, the plaintiffs say in the lawsuit, if Yotta and Evolve had been better prepared for a migration of banking services, and instead consumers  “suffered an array of harms and indignities, finding themselves without money to pay for gas, food and medicine.”

How Does Yotta Work?

Yotta is a fintech app and gaming platform, which gives users a prize-linked savings account where interest payments on bank deposits are distributed as prizes based on chance—essentially a savings up where you can gamble to win interest payments. For every $25 a user deposits, they get the chance to enter a lottery toward winning $10 million.

The app also gives users a Yotta Credit Card and Debit Card, in which every transaction earns the person a chance to win a prize equal to the transaction’s value. According to the company, it has more than one million users involved in its sweepstakes lottery banking approach. 

History of User Complaints Raises Questions About Yotta's Practices

However popular Yotta is, this lawsuit isn’t the first time consumers have had issues with the company. The internet is rife with complaints, including on Reddit and Better Business Bureau, where users have sounded off about being blocked from their money and possible prizes before the outage even occurred.

In 2023, one consumer filed a lawsuit after Yotta locked his account without reason, saying “without access to his Yotta funds, Plaintiff claims, he was unable  to pay for household necessities for the approximately two days that his account was frozen; his power was temporarily shut off, causing him to lose a day's worth of wages; and he was unable to participate in the nightly sweepstakes drawings on April 15 and 16, 2023.”

Other Financial Companies Also Face Heat From Consumers 

It’s not just Yotta and Evolve in court due to consumers’ frustrations. Wells Fargo consumers are accusing the company of supporting a ponzi scheme that defrauded 1,000 mostly senior investors out of $300 million of their life savings, according to a proposed class action lawsuit.

Meanwhile, in another gaming related issue, Google has kept millions of dollars stolen from unsuspecting victims through gift card scams and subsequently spent in the tech giant’s store by refusing to refund victims, or even warn them of risks associated with the gift cards, a new lawsuit alleges. 

And, in the flip of the coin, an appeals court recently ruled that Coinbase, the largest U.S. cryptocurrency exchange, must face allegations from customers that it illegally sold securities and failed to register as a broker-dealer.

In their lawsuit against Yotta, the plaintiffs want to represent all US consumers affected by the outage. They are suing for negligence, breach of contract, unjust enrichment, conversion, and more, and are seeking damages and injunctive relief.

Case Details

• Lawsuit: Baumgartner, et al. v. Yotta Technologies Inc., et al.
• Case Number: 1:24-CV-05535-AKH
• Court: U.S. District Court for the Southern District of New York

Plaintiffs' Attorneys

• John A. Yanchunis and Ronald Podolny (Morgan & Morgan Complex Litigation Group)