Watchdog org raises concerns with popular debt-cancellation app

Play to Pay (Off)

Americans are saddled with astronomical levels of student debt: $1.9 trillion in loans as of 2019. It’s a figure that has multiple resonances across the economy (just imagine how this debt load impacts home ownership, for instance). Promises by Democratic presidential contenders notwithstanding – Sen. Bernie Sanders, for instance, wants to eliminate student debt altogether – the young and no-longer-so-young people who are laboring under student debt loads are trying all sorts of strategies to pay their way out.

The App Giveth …

Enter Givling, best described as a trivia game app, or the company that runs the app. In either case, Givling takes an unorthodox approach to helping student debtors shed their obligations.

Givling’s a bit confusing, so bear with us. The company invites users to crowdfund the payoff of individual student debt through three separate modes: a trivia game, a queue and random drawings. Players can tackle the trivia game, joining randomly selected teammates to win and split cash prizes. Players who invest time in the trivia game are entered in a random drawing for $500 daily prizes or a $10,000 weekly prize.

Then there’s the queue – really two queues, but we don’t have enough room to go into detail here. Players amass “queue points” to move ahead; queue points can be earned by playing the trivia game, watching advertisements on the app, signing up for Givling’s sponsor offers and purchasing merchandise. The top queue winner receives $50,000 to put toward his or her student loan.

Given the debt load carried by former students, it’s no surprise that the company made a big splash when it announced that it had distributed $4 million in prize money.

The App Taketh Away?

There’s where Truth in Advertising Inc. (TINA) stepped in, with an exposé describing questionable activity by the company.

First, the queue. As we mentioned before, the structure of it is confusing, with two different subqueues providing winners for the same small winner’s circle. According to TINA, Givling is less than forthcoming about the nature of the queue even when pressed – indeed, it may have acted to obscure its mechanics.

So far, TINA’s accusations would be troubling. But the watchdog raises additional concerns over the amount that entrants wind up spending to climb in the queue. Some players are criticizing the system for charging players to advance in the lists with little chance for payoff: “The quickest way to advance in the queue is to spend money,” says the report. “But even if you consistently spend the maximum $2,500 on coins a week, if the people around you in the queue are matching your every move, not only is it possible that you remain in place, you could actually go down in ranking.”

One $50,000 winner who spoke with CNBC for a story on the same accusations claims she laid out $42,000 over three years to get to the top of the queue, for an $8,000 net gain.

To make matters worse, TINA says, Givling has included a nondisparagement clause in its terms and conditions that may be silencing winners who wish to criticize the company.

The Takeaway

If these accusations sound like borderline criminal behavior to you, you’re not alone. The Minnesota Department of Public Safety investigated the company for similar reasons, concluding that it was an “illegal lottery” (Givling has since come into compliance with the Minnesota statute, according to state officials).

Is there real magic to Givling? Does its activity, on balance, help solve an agonizing problem that plagues indebted students? Or is the company simply a sophisticated multilevel-marketing scheme that relies on competitive urges that might otherwise be worked out in a casino?

We’ll see what surfaces next. TINA didn’t promise action in its article – the organization framed its report as a warning, rather than a referral – but if the accusations are true, it’s easy to imagine that other state and federal authorities will be poking around soon.