Banking app Dave didn't provide promised cash advances and charged customers hidden fees, according to a Federal Trade Commission complaint 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 FTC’s 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 time and most customers got much smaller amounts like $25, the FTC said.
Instead, the FTC said the 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."
In response, a Dave spokesperson told ConsumerAffairs the company has been cooperating with the FTC for months and that the agency's action is an overreach.
"The FTC asserts many incorrect claims regarding Dave’s disclosures and how the Company acquires consent for the fees associated with our products," the Dave spokesperson said. "Dave’s ability to charge subscription fees and optional tips and express fees is not in question."
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.
"I’ve 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 companies to pay victims 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 Executive Jason Wilk said in a statement.