Cash Delivered to Your Door: What Could Possibly Go Wrong?

The Wall Street Journal reported last week that the brokerage Robinhood is partnering with Gopuff to deliver cash directly to customers’ homes. For $6.99 (or $2.99 if you’ve got over $100K in your account), skip the teller, skip the ATM, and get your money in a sealed paper bag at your doorstep.

I’m already picturing it: an alert pops up—“Your money has been delivered!”—complete with a photo of a cash bag on my front stoop next to the Amazon delivery. Brokerage firms have been competing with traditional banks since the introduction of the money market account, which gave brokerage clients daily liquidity and check-writing privileges. Now, like Amazon, challenging Walmart with delivery, Robinhood challenges your corner bank with delivery.

What could go wrong? asks the guy who runs an app helping seniors avoid financial fraud.

Start with everything that already happens at banks: miscounts (happened to me), wrong denominations, and the fact that criminals target people leaving banks with cash. At least banks have security cameras recording everything that can be used to identify the crooks after the fact.

Now picture this: A delivery driver on a moped pulls up with a box marked “Robinhood.” (Mel Brooks would have them in tights, no doubt.) Your nosey neighbors notice: “The Neighbor got a cash delivery today.” Mmaybe it becomes a status symbol.  A Mercedes parked in the driveway that we do not have to drive, as we get everything delivered. Maybe that is no different than being spotted at the bank or ATM.

Except it is different-you have lost security and opened another door to your wealth. Someone across town hacks your account—or has “befriended” you. The hacker changes your address today and tomorrow, rerouting the cash delivery. Or they wait at your door, pretending to be you. Or they hold you at gunpoint inside while signing for the cash—no security cameras. No witnesses.

Maybe withdrawal limits will be small enough that criminals won’t bother. Maybe. But what amount makes it worthwhile for the bad guys? What limit is so small that you would not use the service?

Speed is a double-edged sword. In today’s mostly cashless world, with Zelle and Venmo readily available, I see far more ways cash delivery exposes people—especially seniors—to unnecessary risk than legitimate use cases.  Ask yourself, how often do you really need cash?

Here’s the truth about convenience: ease for the consumer means ease for the swindler.

Yes, two-factor authentication is a hassle. Seat belts are uncomfortable. They also save lives. By one estimate, financial frauds cost people $400 million a day. Many do not get reported because people are too embarrassed to admit that their Romeo swindled them, or that their best friend broker invested in his son’s pizza business.

Maybe you’re working now and can absorb a loss to a scammer. But once you retire? Financial setbacks are hard to recover from when you have no income. The good news: you’re not punching a clock anymore. You have time. How long does it take to drive to the bank or to pay via Zelle? That’s nothing compared to the loss.

Use time to your advantage. Slow down the money movement.

Matt Halperin, CFA, is the founder of Act2 Financial, an app that helps seniors avoid financial fraud. For 30 years, he worked as a portfolio manager and risk manager at large U.S. money managers. Matt currently serves on the investment committee of two endowments.  He has a BA and MBA from the University of Chicago, and resides outside of Boston.