The Federal Trade Commission (FTC) sued the financial services app Dave on Nov. 5, accusing it of using misleading ads to deceive users about the amount of cash advances they could get through the app.
The FTC alleged that the ads misled users into believing that they could obtain cash advances of up to $500 through the app, even though this advance was offered “only a tiny percentage of the time,” with many users not receiving any advance at all.
The app is accused of charging a 15 percent tip from consumers without their consent and falsely claiming that it would use this payment to fund meals for children in need, according to the complaint.
The complaint stated that Dave does not provide the meals to needy children as claimed, but instead makes a token charitable donation of $1.50 or less, while keeping the rest of the tip amount for itself.
The FTC said that Dave’s public filings with the Securities and Exchange Commission revealed the company earned more than $149 million in revenue from the so-called tips from 2022 through June 2024.
According to the complaint, Dave allegedly charged its users a $1 monthly membership fee, which was debited directly from their bank accounts without their consent.
The FTC stated that Dave also failed to provide simple mechanisms for users to cancel this charge.
“Whether the products are called cash advances, payday loans, or something else, the FTC will take action to protect consumers from unauthorized charges and deceptive claims,” Levine said.
The FTC accused the company of violating the FTC Act and the Restore Online Shoppers’ Confidence Act and sought a permanent injunction to prevent future violations and unspecified monetary relief.
In response, Dave described the case as “another example of regulatory overreach by the FTC” and said that it would defend itself. The company said it takes compliance and customer transparency “very seriously.”
“For the avoidance of doubt, Dave’s ability to charge subscription fees and optional tips and express fees is not in question,” it added.