FTC takes action against US neobank Dave for allegedly “using misleading marketing”
The US Federal Trade Commission (FTC) says it is taking action against Los Angeles-based neobank Dave for allegedly “using misleading marketing to deceive consumers about the amount of its cash advances, charging consumers undisclosed fees, and charging so-called ‘tips’ to consumers without their consent”.
FTC takes action against Dave
In a press release posted on 5 November 2024, the FTC writes: “Dave’s advertising is dominated by claims that consumers can receive ‘up to $500’ by using Dave, and that they can do so ‘instantly.’ According to the FTC’s complaint, though, Dave’s service failed to live up to its promises.”
In the release, Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, says: “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’.”
Levine continues: “Whether the products are called cash advances, payday loans, or something else, the FTC will take action to protect consumers from unauthorised charges and deceptive claims.”
In its complaint, the FTC writes it “seeks relief, including a permanent injunction, monetary relief, and other relief”.
Dave released a statement regarding the matter alongside its preliminary financial results for Q3 2024 on Tuesday, writing: “Following months of good-faith negotiations, we are disappointed the FTC has chosen to file suit against Dave, a company on a mission to level the financial playing field for the millions of Americans poorly served by the legacy financial system.
“The FTC asserts many incorrect claims regarding Dave’s disclosures and how the Company acquires consent for the fees associated with our products. For the avoidance of doubt, Dave’s ability to charge subscription fees and optional tips and express fees is not in question.
“We believe this case is another example of regulatory overreach by the FTC, and we intend to vigorously defend ourselves. We take compliance and customer transparency very seriously and believe that we have always acted within the law. We remain focused on serving our members who love and rely on our products.”
Dave’s founder and CEO Jason Wilk adds: “It is worth emphasising that the FTC’s action, for which we believe we have strong defenses, is related to consumer disclosures and consent, not our ability to charge subscription fees and optional tips and express fees moving forward. Accordingly, we have not contemplated any changes to our forecast as a result of the FTC’s action.
“With strong profitability, we believe we are well-positioned to sustain a vigorous defense and bring this matter to resolution. Our commitment to transparency, compliance, and customer trust remains our highest priority as we continue to serve the needs of our members.”
Separately, the FTC also announced on Monday that it is “sending more than $17 million in refunds” to consumers it alleges were “harmed by online cash advance provider Brigit”. The regulator alleges that Brigit “deceived consumers with false promises of ‘instant’ cash advances and locked consumers into a monthly membership they couldn’t cancel”.
