This year, 16% of restaurant operators plan to invest in artificial intelligence, including voice recognition, according to a survey from the National Restaurant Association. Most of the big spending comes from large chains, which have the capital and scale to make the technology work for their businesses.

Even before the pandemic, labor costs had been rising for restaurants, leading operators to look to technology to boost their profit margins. Then Covid came, which not only accelerated labor costs but also led to a shift away from dining rooms and toward drive-thru lanes. California’s decision earlier this year to hike wages for fast-food workers to $20 an hour has only made operators more inclined to embrace technology to cut their labor costs, which has so far helped mostly in the automation of back-of-the-house tasks.

At the same time, ChatGPT and other AI tools have fueled new excitement for generative AI in restaurants, though the industry is typically slow to embrace technological advances.

One stumbling block for the burgeoning tech came in June, when McDonald’s told its franchisees that it would end its trial of Automated Order Taker, AI technology meant for its drive-thru lanes through a partnership with IBM. Once an early mover in the voice-ordering race, the fast-food giant now plans to turn to other vendors.

Then there’s Presto Automation, the AI drive-thru technology company which disclosed last year in Securities and Exchange Commission filings that it uses “human agents” in places like the Philippines and India to complete orders. Presto interim CEO Gee Lefevre maintains that using humans is common in the AI industry and helps train the technology without straining the restaurant’s workforce. The company unveiled a fully autonomous version in May. Still, the initial lack of transparency may scare off some operators.

While some restaurants may be skeptical of using AI for drive-thrus now, adoption may increase in the coming months and years.

The tipping point for voice ordering is likely in 12 to 18 months, according to T.D. Cowen analyst Andrew Charles. That’s when he thinks at least two of the nation’s top 25 restaurant chains will go all in, expanding their small trial runs of the technology across their footprints.

“It’s like third-party delivery a few years ago: Everyone was testing it, then when McDonald’s went with Uber, everyone else followed with their own partnerships,” Charles said.

This time, McDonald’s likely won’t be the first mover.

Companies with voice-ordering technology say their AI doesn’t replace jobs — it just frees up workers for other tasks. They also tout secondary benefits.

SoundHound, an early leader in the space, said that its AI can take more than 90% of orders without requiring human intervention; the typical accuracy rate for humans is between 80% to 85%. SoundHound also said that its AI can speed up drive-thru lanes by roughly 10% because it can process orders faster. Plus, AI tries to upsell customers every order, raising average check size.

Moreover, in the future, AI could be able to take orders from non-English speakers, representing a large opportunity both internationally and domestically, according to Charles.

But for all the possible pros, there are also some drawbacks to generative AI.

For one, restaurants risk damaging their reputations by using artificial intelligence, Bank of America Securities analyst Sara Senatore wrote in a research note on Friday. For example, inaccurate orders can cause delays and frustration, even if the AI transfers customers to a human restaurant worker.

Moreover, while younger customers might enjoy the increased efficiency and lack of human interaction, older age cohorts tend to think differently. The majority of baby boomers would prefer fewer technology options while dining, according to a consumer survey from earlier this year conducted by the National Restaurant Association.

Then there’s the fact that the technology isn’t perfect. Restaurants with weak Wi-Fi will need to speed up their internet connections. Locations by noisy highways will likely find that voice-ordering tech will need a few years to catch up and better understand customers. And restaurants with long, complicated menus will likely find that the AI struggles are more pronounced.

For McDonald’s, the risks aren’t worth it — for now.

The fast-food giant’s foray into AI for the drive-thru began in 2019, when the company bought Apprente, renaming it McD Tech Labs. Two years later, McDonald’s sold McD Tech Labs to IBM and announced a global partnership with the tech company for undisclosed terms. McDonald’s had already tested the technology at a handful of Chicago area locations. Offloading the tech to IBM led to a larger scale test of roughly 100 restaurants.

But the results from the trial run fell short of McDonald’s standards. The technology had issues interpreting different accents and dialects, hurting order accuracy, among other challenges, two sources familiar with the matter told CNBC. At the time, McDonald’s declined to comment on the technology’s accuracy or challenges, while IBM did not respond to a request to comment on the tool’s accuracy.

Despite the setback, McDonald’s isn’t abandoning the goal of using artificial intelligence to take drive-thru orders.

“While there have been successes to date, we feel there is an opportunity to explore voice ordering solutions more broadly,” Mason Smoot, senior vice president and chief restaurant officer for McDonald’s U.S., wrote in a memo to franchisees. 

The Golden Arches isn’t the only chain with a voice-ordering test.

Yum Brands’ Taco Bell is expanding its test of voice AI from five locations to 30 restaurants in California “based on positive consumer feedback,” executives said in early May. White Castle plans to use SoundHound’s technology in more than 100 of its restaurants by year-end. And last year, Wendy’s announced a test at a company-owned restaurant in Columbus, Ohio, through a partnership with Google.

So far, early movers have largely been companies with lower average unit volumes, T.D. Cowen’s Charles said. The industry metric refers to a chain’s average annual sales by restaurant. Because those chains’ locations have lower sales, there’s more financial incentive to use AI to mitigate higher labor costs, according to Charles.

Panera Bread founder Ron Shaich told CNBC that the real winners will be a “fast follower” rather than the first mover with voice ordering. Shaich, who currently serves as chair of Cava and chief executive of his own investment firm Act 3 Holdings, claims credit for being the first mover on plenty of restaurant tech advancements: free Wi-Fi in Panera’s restaurants, combining the chain’s mobile app and loyalty program and introducing self-order kiosks.

But in the case of voice ordering, Shaich said he thinks it’s better to sit tight while the technology gets ironed out and focus on making sure the overall customer experience can beat the competition.

“Nobody’s running to a restaurant because it has this technology,” he said.

— CNBC’s Kate Rogers contributed reporting for this story.

In a notice posted on the Consumer Product Safety Commission’s website, Hatch said it had received 19 reports of the plastic housing surrounding the AC power adapter coming off, leading to two reports of consumers experiencing a minor electrical shock.

The product is sold by Hatch online in addition to other retailers like Amazon, Target, BuyBuyBaby, Pottery Barn Kids and Best Buy.

Hatch said consumers should immediately stop using the recalled adapters and contact them for a free replacement. It said they should unplug and cut the cord on the recalled adapter, then submit a photo showing the model number and the cut cord at www.hatch.co/adapterrecall.

Here are the key numbers:

Total deliveries Q2 2024: 443,956 vehicles

Total production Q2 2024: 410,831 vehicles

Tesla’s numbers beat Wall Street estimates. Analysts expected Tesla deliveries to hit 439,000 in the three months ending June 30, according to a consensus of estimates compiled by FactSet StreetAccount. The total number of deliveries in the second quarter was down 4.8% from 466,140 a year earlier but 14.8% higher than the first quarter of 2024.

Shares in the EV maker rose more than 8% in early trading on better-than-expected deliveries report.

Before the report, Tesla shares were down 16% in 2024 even after rallying 6% on Monday.

Deliveries are the closest approximation of sales disclosed by the electric vehicle maker. Tesla groups deliveries into two categories — Model 3 and Model Y vehicles, and all other vehicles — but doesn’t report numbers for individual models or specific regions.

Tesla’s current lineup includes its popular Model Y crossover utility vehicles, Model 3 sedans and the new Cybertruck pickups, as well as the Model X SUV and flagship Model S sedan.

In April, Tesla reported a drop of 8.5% in first-quarter deliveries to 386,810, the first annual decline since 2020. Weeks later the company reported a 13% decline in year-over-year revenue for the quarter, “primarily due to lower average selling price.”

Sluggish sales were in part the result of temporary factory shutdowns initiated in response to an alleged arson attack at Tesla’s factory in Germany, as well as shipping delays following Red Sea conflicts, Tesla said.

But the sales drop also correlated with Tesla’s aging lineup of vehicles, increased competition from other EV makers especially in China, and brand erosion that one recent survey attributed partly to CEO Elon Musk’s “antics” and “political rants.”

Tesla has offered a range of discounts and other incentives this year to try to spur sales.

In China, Tesla is currently offering a zero-interest loan as an incentive to get customers to buy a Model 3 or Model Y by July 31. According to its 2023 annual filing, Tesla generated about $21.75 billion of its overall revenue from China, representing 22.5% of total sales.

Colin Langan, an analyst at Wells Fargo, issued a report on Monday, saying the firm sees “declining delivery growth driven by lower demand & diminished return on price cuts.” He recommends selling Tesla shares.

Wells Fargo expects automotive gross margins at Tesla, not including environmental credits, to fall given the “likelihood of more price cuts & lower volumes” as the year continues.

Investor focus will now shift to Tesla’s second-quarter earnings report later this month and a separate marketing event planned for August when the company intends to reveal its design for a dedicated robotaxi or “CyberCab.”

EverPass Media, the joint venture between the league and private equity firm RedBird Capital Partners that owns the commercial rights to “Sunday Ticket,” acquired UPshow, a platform with the tech capabilities to allow commercial establishments to stream live sports. Terms of the deal were undisclosed.

With this acquisition, bars, restaurants, casinos and other businesses will be able to stream “Sunday Ticket” games. Until recently, they could only do so through a subscription to satellite TV provider DirecTV.

DirecTV will remain as a distributor to bars and restaurants, however. EverPass signed a nonexclusive deal with DirecTV last year to continue to distribute “Sunday Ticket” games, giving it the ability to reach deals with other distribution platforms.

“More content is moving to streaming. Regardless of the streaming economics, it’s become pretty clear that live sports is an important piece of that,” said EverPass CEO Alex Kaplan. “We’re going to think about how to deliver a product and service to our customers that’s becoming increasingly more challenging for them to sort of aggregate in a meaningful way. We’re still in the early days … but this is a big step for us.”

The new distribution option will be available this coming NFL season.

The acquisition for EverPass comes as more live sports games are being offered exclusively on streaming services — a new frontier for business establishments that have long subscribed to traditional pay TV packages to offer live sports.

“Sunday Ticket” is an integral sports package for bars and restaurants since it provides all out-of-market NFL games.

In late 2022, Google’s YouTube TV acquired the residential rights to “Sunday Ticket” for roughly $2 billion a year, a deal which runs over seven years. DirecTV had been the owner and exclusive residential and commercial distributor of the games since the package’s inception in 1994.

This followed a deal for Amazon’s Prime Video to become the exclusive home of ‘Thursday Night Football’ — part of the 11-year NFL media rights agreement worth over $100 billion.

Since then, the media rights owners of NFL games have begun to offer games simultaneously on their streaming services — and in some cases exclusively. Earlier this year Comcast’s NBCUniversal aired an NFL Wild Card game on Peacock, the first time a postseason game was exclusively offered via streaming. Netflix also recently won the rights to air two NFL games on Christmas this year, and at least one on the holiday in the following two years.

EverPass also brought on a new investor this week.

The joint venture announced that TKO — the newly merged company that owns UFC and World Wrestling Entertainment — will enter the ownership group. TKO is majority-owned by Endeavor Group Holdings.

“Now with RedBird, the NFL and TKO behind us, we think we have the means to put even more behind that technology,” said Kaplan.

EverPass is also looking to become a distributor for other content in addition to “Sunday Ticket” and the NFL.

“We’re out there looking at new content, and we certainly think they have great content and expect those will be discussions that we have in the near future,” said Kaplan on whether EverPass will distribute TKO’s WWE or UFC. “In general, we feel really good about our content pipeline.”

The company first partnered with UPshow when it started providing Peacock Sports Pass, which is a way for commercial establishments to stream some of the live sports on NBCUniversal’s streaming platform, including the NFL, Premier League and college football.

Pricing for Peacock Sports Pass, similar to the upcoming distribution of “Sunday Ticket,” is dependent upon the commercial establishment’s classification, according to the company’s website.

In addition, the acquisition of UPshow will give EverPass the opportunity to explore distribution globally at a moment when leagues like the NFL, National Basketball Association and Major League Baseball are pushing into international markets.

“Technology transcends borders. So all of a sudden we actually have the capability to go international,” said Derek Chang, executive chairman of EverPass. “And then the investment of Endeavor/TKO, which obviously has a tremendous amount of reach globally in terms of relationships.”

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

In a few days, bankrupt Tokyo-based bitcoin exchange Mt. Gox will begin paying back thousands of users almost $9 billion worth of tokens. The platform went under in 2014 following a series of heists that cost it in the range of 650,000 to 950,000 bitcoin, or upward of $58 billion, at current prices.

The payout follows a protracted bankruptcy process that’s involved multiple delays and legal challenges.

On Monday, the court-appointed trustee overseeing the exchange’s bankruptcy proceedings said distributions to the firm’s roughly 20,000 creditors would begin in early July. Disbursements will be in a mix of bitcoin and bitcoin cash, an early offshoot of the original cryptocurrency.

While this is good news for victims of the hack who have spent years waiting to be made whole, the price of bitcoin slid to $59,000 last week, in the crypto market’s second-worst weekly decline of the year.

CNBC spoke to half a dozen analysts to get their take on what to expect when roughly 141,000 bitcoin — or roughly 0.7% of the total 19.7 million bitcoins outstanding — are returned to Mt. Gox victims this week.

Mt. Gox — short for “Magic: The Gathering Online Exchange” — was once the largest spot bitcoin exchange globally, claiming to handle around 80% of all global dollar trades for bitcoin.

When it shuttered in February 2014, bitcoin was worth around $600.

Today, the world’s largest cryptocurrency is trading at about $61,000 per coin. That means users opting to be reimbursed in-kind — that is, in the cryptocurrency itself, rather than the cash equivalent — have seen the value of their coins surge over 10,000% in the last decade.

John Glover, chief investment officer of crypto lending firm Ledn, told CNBC the windfall for Mt. Gox users would likely translate to huge sales in bitcoin as investors look to lock in gains.

“Many will clearly cash out and enjoy the fact that having their assets stuck in the Mt. Gox bankruptcy was the best investment they ever made,” said Glover, who was previously a managing director at Barclays. “Some will clearly choose to take the money and run,” added Glover.

James Butterfill, head of research at CoinShares told CNBC the overhang of the nearly $9 billion of bitcoin set to be released has “long been a concern for those with bullish views on bitcoin.”

″Consequently, the market is highly sensitive to any related news. With the announcement that the Trust will begin selling in July, investors are understandably worried,” said Butterfill.

It wouldn’t be the first time bitcoin’s moved in reaction to big redemptions of funds locked up in centralized trading platforms.

Last month, crypto exchange Gemini returned more than $2 billion worth of bitcoin to users with funds that had been trapped in its Earn lending program, marking a 230% recovery after bitcoin prices more than tripled since Gemini suspended Earn withdrawals on Nov. 16.

JPMorgan analysts linked this to negative price action, saying in a research note last week that it’s “fair to assume that some of Gemini creditors, which are mostly retail customers, have taken at least partial profits in recent weeks.”

Similarly, JPMorgan analysts expect Mt. Gox customers to be similarly inclined to sell some of their bitcoin to profit from seismic gains for the cryptocurrency.

“Assuming most of the liquidations by Mt. Gox creditors take place in July, [this] creates a trajectory where crypto prices come under further pressure in July, but start rebounding from August onwards,” they wrote.

Separately last month, the German government sold 5,000 — worth approximately $305.8 million as of Thursday’s prices — of a 50,000-bitcoin pile seized in connection with the movie piracy operation Movi2k.

The funds were sent to various crypto exchanges, including Coinbase, Kraken, and Bitstamp, according to blockchain intelligence firm Arkham Intelligence.

Analysts say these crypto liquidations, too, have placed pressure on bitcoin’s price.

Most analysts agree losses in bitcoin are likely to be contained and short-lived.

“I think that sell-off concerns relating to Mt. Gox will likely be short-term,” said Lennix Lai, chief commercial officer of crypto exchange OKX.

“Many of Mt. Gox’s early users as well as creditors are long-term bitcoin enthusiasts who are less likely to sell all of their bitcoin immediately,” he said, adding previous sell-offs by law enforcement, including the Silk Road case, did not result in a sustained catastrophic price drop.

Butterfill suggested there’s enough market liquidity to cushion the blow of any possible mass market sell action.

“Bitcoin has maintained a daily trading volume of $8.74 billion on trusted exchanges this year, suggesting that liquidity is sufficient to absorb these sales over the summer months,” said Butterfill.

According to CCData research analyst, Jacob Joseph, the markets are more than capable of absorbing the selling pressure.

“Moreover, a healthy part of the creditors are likely to take a 10% haircut on their holdings to receive the repayment early, and not all holdings are set to be liquidated on the open market, reducing the overall selling pressure,” he said.

Recent price moves suggest the temporary impact of the Mt. Gox repayments may already be priced in, Joseph added.

Galaxy Digital’s head of research, Alex Thorn, believes fewer coins will be distributed than people think, meaning there will be less sell pressure than the market expects.

However, he also wrote in May that, even if only 10% of the bitcoin distributed is sold, “it will have a market impact.” 

“Most of the individual creditors will have their coins deposited directly into a trading account at an exchange, making it extremely easy to sell,” Thorn said.

Vijay Ayyar, head of consumer growth for Asia-Pacific at crypto exchange Gemini, said that the overall impact of the Mt. Gox disbursement is likely to be “dissipated,” given the recipients of the funds are varied.

On the one hand, there are individual holders who will get their bitcoin straight away. Then there’s the “significant amount” of bitcoin that will be disbursed out to claims funds, Ayyar said.

“Those funds would then need to distribute these out to their LPs [limited partners], hence the whole process could take a while adding a time element to the impact on price,” he told CNBC.

It’s worth noting there are plenty of other reasons behind bitcoin’s recent declines.

The cryptocurrency had a stunning rally earlier this year, climbing past $70,000 on the heels of the U.S. Securities and Exchange Commission’s approval of the first spot bitcoin ETF.

But investors have remained anxious amid outflows from bitcoin ETFs and sizable market liquidations. The broader macro environment, too, has investors worried.

Earlier this month, the Federal Reserve suggested it plans to cut rates just once this year, down from the multiple cuts it had indicated previously.

Cryptocurrencies, which are inherently volatile, are particularly sensitive to changes in the interest rate environment.

CoinShares’ Butterfill said the Fed’s new rate forecast was among “the likely culprits for the recent price decline” in bitcoin.

This, along with other issues, is “likely to weigh on prices in the lower volume summer months,” Butterfill said. However, “the fundamental investment case remains very much intact,” he added.

The animated feature has tallied $1.014 billion worldwide as of Sunday, making it the highest-grossing film of 2024 and the first film since Warner Bros.′ “Barbie” to top $1 billion at the global box office.

“On behalf of movie theatre owners across the country and around the world, we want to congratulate Disney’s ‘Inside Out 2’ for grossing $1 billion faster than any animated movie in history,” said Michael O’Leary, president and CEO of the National Association of Theatre Owners. “The film’s stunning global success once again illustrates that audiences the world over will respond to compelling, entertaining movies, and that they want to enjoy them on the big screen.”

The billion-dollar benchmark is a much-needed win for Disney’s Pixar animation hub. A once prolifically successful studio, Pixar has suffered at the box office in the wake of the pandemic. Much of its difficulties have come, in part, because Disney opted to debut a handful of animated features directly on streaming service Disney+ during theatrical closures and even once cinemas had reopened.

As a result, before “Inside Out 2,” no Disney animated feature from Pixar or its Walt Disney Animation studio had generated more than $480 million at the global box office since 2019.

“Inside Out 2” has also showcased how vital the family audience is to the box office. This underserved crowd accounted for more than 70% of those in attendance during the film’s domestic debut, according to data from EntTelligence.

While this audience came out in droves for Universal’s “The Super Mario Bros. Movie,” which generated more than $1.36 billion at the global box office, there was little for them to feast on until the recent releases of Sony’s “The Garfield Movie” and  Paramount’s  “IF.”

“Inside Out 2” also drove the coveted teen demographic to cinemas, with 14% of foot traffic coming from those aged 13 to 17. This younger generation has been largely absent from the market in recent years.

As the future of moviegoing, this group is particularly important to the industry. Getting them back to the big screen has become a top priority for studios and movie theater operators.

Next up for family and teens is Universal and Illumination’s “Despicable Me 4,” due out in theaters during the July Fourth holiday weekend.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

Some, referred to as “NEETs,” which stands for “not in employment, education, or training,” are opting out of the labor force largely because they are discouraged by their economic standing.

Others, alternatively, are well-qualified but often younger candidates who are struggling to find positions, comprising a contingent of “new unemployables,” according to a recent report by Korn Ferry. 

Among 16- to 24-year-olds, the unemployment rate rose to 9% in May, which is “typical,” according to Alí Bustamante, a labor economist and director of the Worker Power and Economic Security program at the Roosevelt Institute, a liberal think tank based in New York City.

Although the youth unemployment rate fell below 7% in 2023, according to the U.S. Bureau of Labor Statistics, such lows were “emblematic of how hot the labor market was at that point,” Bustamante said.

“9% is basically what we should be expecting during relatively good economic times for younger workers,” he added.

Still, some young adults in the U.S. are neither working nor learning new skills.

In 2023, about 11.2% of young adults ages 15 to 24 in the U.S. were considered as NEETs, according to the International Labour Organization.

In other words, roughly one in 10 young people are “being left out and left behind in many ways,” Bustamante said.

Even though “that’s typically the norm,” he said, “we should be expecting these rates to be lower.”

Young men, especially, are increasingly disengaged, according to Julia Pollak, a labor economist at ZipRecruiter.

“The NEET trend is mostly a male phenomenon,” she said.

Pollak explained that’s in part due to declining opportunities in traditionally male occupations, such as construction and manufacturing, while “women’s enrollment in schooling, education outcomes, and employment outcomes have mostly trended upwards.”

According to Korn Ferry’s report, a “perfect storm” has also created a glut of “new unemployables,” or highly trained workers who struggle to find job opportunities.

“Employers are holding on to the talent they have and increasingly focusing on talent mobility,” said David Ellis, senior vice president for global talent acquisition transformation at Korn Ferry.

This “talent hoarding” has led to fewer available job openings even for well-qualified candidates, he said.

At the same time, firms are scaling back on new hires, limiting the opportunities at the entry level, as well.

While the teen employment rate is the highest it has been in over a decade, early 20-somethings are struggling to find jobs, Pollak said. “It’s the 20- to 24-year-olds that saw a massive drop off in the labor force participation during the pandemic, and who have lagged behind ever since.”

Overall, hiring projections for the class of 2024 fell 5.8% from last year, according to a report from the National Association of Colleges and Employers, or NACE.

As more candidates compete for fewer positions, stretches of unemployment are also lengthening. Now, the number of people unemployed for longer than six months is up 21%, Korn Ferry found.

Despite those trends in the job market, “all is not lost,” Ellis said.

“Don’t wait to reach out,” he advised. Get back in touch with former employers or colleagues through LinkedIn or email and set up informational interviews. After that initial approach, ask for any job leads or contacts.

In the meantime, make yourself more visible by writing about noteworthy topics in the industry and updating your resume to include keywords and so-called “title tags,” which highlight important elements at the top.

Finally, don’t limit yourself to roles that include a promotion or a raise, Ellis also advised. Rather, aim for a “career lattice,” which could entail taking lower position to gain skills that will pay dividends later.

The Detroit automaker on Tuesday reported sales of 696,086 for the second quarter, up 0.6% from a year earlier and its highest quarterly units sold since the fourth quarter of 2020.

Its EVs deliveries increased 40% compared to a year earlier to 21,930 units. Still, EVs made up only 3.2% of its total second quarter sales.

Auto industry forecasters such as Cox Automotive and Edmunds expect second-quarter sales industrywide, which included July 1, to be roughly level from a year earlier amid slowing retail demand.

An unknown outlier in the second quarter is how much of an impact cyberattacks on dealer software provider CDK Global will have on sales. The June 19 ransomware attack forced CDK, a market leader, to shut down its dealer management system, impacting close to half of all dealerships in North America.

“The CDK cyberattacks have thrown a monkey wrench into sales during the second half of June, affecting what is arguably one of the most lucrative and busiest times of the month and quarter for dealerships,” said Jessica Caldwell, Edmunds’ head of insights.

Dealers, including the industry’s largest publicly traded ones, were forced to delay sales or figure out workarounds to sell vehicles since the attacks occurred.

All six of the major publicly traded franchised dealership groups have disclosed their exposure to the CDK issue. Five of the six — Asbury Automotive Group, AutoNation Inc., Group 1 Automotive Inc., Lithia Motors Inc. and Sonic Automotive Inc. — use CDK as their primary dealership management system provider, according to Automotive News. 

“The good news is — unlike other black swan events that the industry has contended with in the past — sales shouldn’t be lost or severely deferred, but rather pushed into the third quarter,” Caldwell said.

The app made saving money fun and easy, and Craft, a now 25-year-old FedEx driver from Mishawaka, Indiana, was busy getting her financial life in order and planning a wedding. Craft had her wages deposited directly into a Yotta account and used the startup’s debit card to pay for all her expenses.

The app — which gamifies personal finance with weekly sweepstakes and other flashy features — even occasionally covered some of her transactions.

“There were times I would go buy something and get that purchase for free,” Craft told CNBC.

Today, her entire life savings — $7,006 — is locked up in a complicated dispute playing out in bankruptcy court, online forums like Reddit and regulatory channels. And Yotta, an array of other startups and their banks have been caught in a moment of reckoning for the fintech industry.

For customers, fintech promised the best of both worlds: The innovation, ease of use and fun of the newest apps combined with the safety of government-backed accounts held at real banks.

The startups prominently displayed protections afforded by the Federal Deposit Insurance Corporation, lending credibility to their novel offerings. After all, since its 1934 inception, no depositor “has ever lost a penny of FDIC-insured deposits,” according to the agency’s website.

But the widening fallout over the collapse of a fintech middleman called Synapse has revealed that promise of safety as a mirage.

Starting May 11, more than 100,000 Americans with $265 million in deposits were locked out of their accounts. Roughly 85,000 of those customers were at Yotta alone, according to the startup’s co-founder Adam Moelis.

CNBC reached out to fintech customers whose lives have been upended by the Synapse debacle.

They come from all walks and stages of life, from Craft, the Indiana FedEx driver; to the owner of a chain of preschools in Oakland; a talent analyst for Disney living in New York City; and a computer engineer in Santa Barbara. A high school teacher in Maryland. A parent in Bristol, Connecticut, who opened an account for his daughter. A social worker in Seattle saving up for dental work after Adderall abuse ruined her teeth.

Since Yotta, like most popular fintech apps, wasn’t itself a bank, it relied on partner institutions including Tennessee-based Evolve Bank & Trust to offer checking accounts and debit cards. In between Yotta and Evolve was a crucial middleman, Synapse, keeping track of balances and monitoring fraud.

Founded in 2014 by a first-time entrepreneur named Sankaet Pathak, Synapse was a player in the “banking as a service” segment alongside companies like Unit and Modern Treasury. Synapse helped customer-facing startups like Yotta quickly access the rails of the regulated banking industry.

It had contracts with 100 fintech companies and 10 million end users, according to an April court filing.

Until recently, the BAAS model was a growth engine that seemed to benefit everybody. Instead of spending years and millions of dollars trying to acquire or become banks, startups got quick access to essential services they needed to offer. The small banks that catered to them got a source of deposits in a time dominated by giants like JPMorgan Chase.

But in May, Synapse, in the throes of bankruptcy, turned off a critical system that Yotta’s bank used to process transactions. In doing so, it threw thousands of Americans into financial limbo, and a growing segment of the fintech industry into turmoil.

“There is a reckoning underway that involves questions about the banking-as-a-service model,” said Michele Alt, a former lawyer for the Office of the Comptroller of the Currency and current partner at consulting firm Klaros Group. She believes the Synapse failure will prove to be an “aberration,” she added.

The most popular finance apps in the country, including Block’s Cash App, PayPal and Chime partner with banks instead of owning them. They account for 60% of all new fintech account openings, according to data provider Curinos. Block and PayPal are publicly traded; Chime is expected to launch an IPO next year.

Block, PayPal and Chime didn’t provide comment for this article.

While industry experts say that those firms have far more robust ledgering and daily reconciliation abilities than Synapse, they may still be riskier than direct bank relationships, especially for those relying on them as a primary account.

“If it’s your spending money, you need to be dealing directly with a bank,” Scott Sanborn, CEO of LendingClub, told CNBC. “Otherwise, how do you, as a consumer, know if the conditions are met to get FDIC coverage?”

Sanborn knows both sides of the fintech divide: LendingClub started as a fintech lender that partnered with banks until it bought Boston-based Radius in early 2020 for $185 million, eventually becoming a fully regulated bank.

The core personal consumption expenditures price index increased just a seasonally adjusted 0.1% for the month and was up 2.6% from a year ago, the latter number down 0.2 percentage point from the April level, according to a Commerce Department report.

Both numbers were in line with the Dow Jones estimates. May marked the lowest annual rate since March 2021, which was the first time in this economic cycle that inflation topped the Fed’s 2% target.

Including food and energy, headline inflation was flat on the month and also up 2.6% on an annual basis. Those readings also were in line with expectations.

“It is just additional news that monetary policy is working, inflation is gradually cooling,” San Francisco Fed President Mary Daly told CNBC’s Andrew Ross Sorkin during a “Squawk Box” interview. “That’s a relief for businesses and households who’ve been struggling with persistently high inflation. It’s good news for how policy is working.”

The Fed focuses on the PCE inflation reading as opposed to the more widely followed consumer price index from the Labor Department’s Bureau of Labor Statistics. PCE is a broader inflation measure and accounts for changes in consumer behavior, such as substituting their purchases when prices rise.

While the central bank officially follows headline PCE, officials generally stress the core reading as a better gauge of longer-term inflation trends.

Outside of the inflation numbers, the Bureau of Economic Analysis report showed that personal income rose 0.5% on the month, stronger than the 0.4% estimate. Consumer spending, however, increased 0.2%, weaker than the 0.3% forecast.

Prices were held in check during the month by a 0.4% decline for goods and a 2.1% slide in energy, which offset a 0.2% increase in services and a 0.1% gain for food.

However, housing prices continued to rise, up 0.4% on the month for the fourth straight time. Shelter-related costs have proven stickier than Federal Reserve officials have anticipated and have helped keep the central bank from reducing interest rates as expected this year.

Stock market futures were modestly positive following the report while Treasury yields were negative on the session.

Investors have been trying to handicap the Fed’s intentions on rates this year and have had to scale back expectations. Whereas traders earlier in 2024 had been expecting at least six rate cuts this year they are now pricing in just two, starting in September. Fed officials at their June meeting penciled in just one reduction this year.

“The lack of surprise in today’s PCE number is a relief and will be welcomed by the Fed,” said Seema Shah, chief global strategist at Principal Asset Management. “However, the policy path is not yet certain. A further deceleration in inflation, ideally coupled with additional evidence of labor market softening, will be necessary to pave the way for a first rate cut in September.”

The Fed targets 2% inflation and began raising interest rates in March 2022 after a year of dismissing rising prices as transitory effects from the Covid pandemic that likely would fade. The central bank last raised rates in July 2023 after taking its benchmark overnight borrowing level to a range of 5.25%-5.50%, the highest in some 23 years.

Recent economic data has painted a picture of an economy that has withstood the Fed’s aggressive monetary tightening. Gross domestic product rose at a 1.4% annualized rate in the first quarter and is on pace to increase 2.7% in the second quarter, according to the Atlanta Fed.

There have been some slight cracks in the labor market lately, with continuing jobless claims hitting their highest level since November 2021. However, the unemployment rate is still 4%, low by historical means though also rising at a slow pace.