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Consumers Beware: How Are Your Favorite "Free" Investment Apps Regulated?, Siqi Wang

Duke Law & Technology Review

The proliferation of free or low-cost investment apps has disrupted the financial industry in recent years. Major brokerage firms have been pressured to go to zero fees due to intense competition from their fintech counterparts. While these apps have extended their products and services to those underserved by traditional brokers, some of their practices raise consumer protection concerns. Namely, the practice of “payment for order flow,” which helps fintech startups sustain a zero-commission model, could lead to subordinating customers’ best interest to market makers who acquire their retail orders from these fintech startups. Further, “cash management accounts,” newly popular among …