The Federal Trade Commission (FTC) has filed a lawsuit against Dave Inc., a financial technology company, accusing it of deceptive advertising practices related to its cash advance services. The complaint, lodged in federal court on Tuesday, alleges that Dave misled users by promoting cash advances of up to $500 that many customers never receive.
The FTC’s investigation revealed that only a small fraction of users are eligible for the full advertised amount, with many not receiving any cash advance at all. The app primarily targets individuals facing financial difficulties, yet fails to transparently disclose significant fees associated with its services. Users may incur a fee of up to $25 for instant cash access and a recurring monthly membership fee of $1, which are not clearly communicated upfront.
Additionally, the FTC claims that Dave employs tactics to solicit “tips” from users on transactions without their explicit consent. These tips are misleadingly presented as contributions toward providing meals for children in need, while in reality, only a fraction of the funds collected are donated. The complaint highlights that Dave retains the majority of these tips, raising ethical concerns about its marketing practices.
“Dave lured in consumers living paycheck-to-paycheck with false claims of big-dollar advances, then reached into their pockets to give itself a so-called ‘tip,’” stated Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. He emphasized that the agency is committed to protecting consumers from unauthorized charges and deceptive claims.
In response to the lawsuit, Dave has stated that many allegations are inaccurate and plans to vigorously defend itself against the claims. The company argues that its business model is compliant with existing regulations and insists on its commitment to transparency and customer service.
This legal action against Dave is part of a broader scrutiny facing fintech companies that promise quick financial solutions but may not always deliver on their promises. As the fintech landscape evolves, regulators are increasingly focused on ensuring consumer protection and accountability within the industry.
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