FTC alleges Dave charged hidden fees ranging from $3 to $25 and 15% "tips"
Banking app Dave didn't providepromised cash advances and charged customers hidden fees, according to aFederal Trade Commissioncomplaint filed on Tuesday.
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,said Samuel Levine, director of the FTCs Bureau of Consumer Protection.
Dave, a publicly-traded company describing itself as a "neobank," currently advertises "instant ... up to $500" cash advances, but only offered the full amount a tiny percentage of the timeand most customers got much smaller amounts like $25,the FTC said.
Instead, the FTC saidthe company raked in hidden fees from its customers, including an "Express Fee" ranging from $3 to $25 to receive money and a suggested 15% "tip."
Dave included an image of a child with food and the text "Feeding America"when asking for the "tip," suggesting the money was going to charity, but the FTC said the company only donated 10 cents for each "tip."
Dave didn't immediately respond to ConsumerAffairs's emailed request for comment.
Made it hard to leave
According to the FTC, Dave has described the customers it targets as "financially vulnerable" or "financially coping," including those with spending exeeding their income, have minimal savings and who often overdraft from their banks.
The FTC said that Dave also made it difficult for customers to leave.
"Ive tried leaving, but they literally will not let me go. I had to fight with them to delete my account, and I kept getting charged the membership fee... LEAVE ME ALONE. I HATE DAVE," one customer wrote, according to the FTC's complaint.
The FTC fines companiestopayvictims of predatory cash advance companies, which means the alleged victims of Dave may get compensation.
Earlier this week, the FTC sent more than $17 million to victims of cash-advance app Brigit, which signed up customers to false of promises of "instant" cash advances that trapped them into monthly memberships.
This isn't the first time Dave has been in the crosshairs of regulations.
In July, the company responded to the Consumer Financial Protection Bureau's tightening of regulations around payday loans.
"We are closely monitoring the recently proposed interpretive ruling from the CFPB around paycheck advance and earned wage access (EWA), a model which Dave was originally founded on, but transitioned away from beginning in 2022 due to a lack of certainty around the regulations," Dave Chief ExecutiveJason Wilk said in a statement.
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Posted: 2024-11-06 01:06:11