Federal Trade Commission Sues Fintech Company Over Deceptive Marketing and Hidden Fees

On November 5, 2024, the Federal Trade Commission (FTC) filed a lawsuit against Dave, Inc., a fintech company offering short-term cash advances via its mobile banking app (Federal Trade Commission v. Dave, Inc.).

The Greenberg Traurig firm reports that the FTC alleges deceptive marketing practices, including misleading claims about cash advance amounts, undisclosed fees, and unauthorized charges labeled as “tips.”

The lawsuit, filed in the U.S. District Court for the Central District of California, accuses Dave of violating the FTC Act and the Restore Online Shoppers Confidence Act (ROSCA).

Dave, Inc. markets its app to consumers facing financial hardship, promoting cash advances up to $500. According to the FTC, only a small fraction of users qualify for such amounts.

The agency claims Dave required users to pay hidden “Express Fees” of $3 to $25 for immediate cash access despite advertising free or instant services. Additionally, the company allegedly charged unauthorized tips and monthly subscription fees without obtaining users’ informed consent.

These practices reportedly violated consumer protection standards under the FTC Act and ROSCA by failing to disclose material terms, secure express informed consent, and lack adequate cancellation mechanisms for recurring fees.

As of now, the case remains ongoing. However, the FTC’s complaint highlights serious violations that could result in penalties, restitution, or injunctive relief against Dave should the court rule in the FTC’s favor.

The Federal Trade Commission is carefully scrutinizing fintech practices, especially regarding transparency in fees, marketing claims, and subscription mechanisms. Lawyers advise fintech clients to prioritize compliance audits, particularly advertising “up to” claims, fee disclosures, and cancellation procedures.