Online Lender Cleo AI to Pay $17 Million to Settle FTC Charges

Cleo AI, an online cash advance company, has agreed to pay $17 million to settle allegations by the Federal Trade Commission (FTC) that it misled consumers about how much money they could receive and how quickly they would get it.

The settlement also addresses complaints that Cleo made it difficult for users to cancel subscriptions, continuing to charge them against their wishes.

In a complaint filed in federal court alongside the proposed settlement, the FTC accused Cleo of false advertising and deceptive business practices, particularly targeting low-income consumers in urgent financial need.

Promises vs. reality

“Cleo misled consumers with promises of fast money,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “But consumers found they received much less than the advertised hundreds of dollars promised, had to pay more for same-day delivery, and then had difficulty canceling.”

According to the FTC:

• Cleo’s ads claimed users could access hundreds of dollars in instant advances, but almost no one received the full advertised amounts.

• Consumers were promised same-day or instant cash, but those speeds required an extra fee, and many still waited until the next day for their funds.

• Cleo allegedly made it hard to cancel subscriptions, continuing to charge users even after multiple requests to stop service. In some cases, the company told users they could not cancel until their outstanding advance was repaid.

One user, cited in the complaint, said, “I need my money right now to pay my rent… I would never have used Cleo if I thought I would be in this situation.” Another reported paying for an immediate $35 advance only to be told the funds could take up to 24 hours.

Settlement terms

Under the proposed settlement:

• Cleo must stop misrepresenting how much money consumers can access and how fast they’ll receive it.

• The company must clearly disclose fees and subscription terms, obtain users’ informed consent before charging them, and provide a simple cancellation method.

• The $17 million settlement will be used to provide refunds to harmed consumers.

This case marks another warning to fintech firms that federal regulators are closely watching marketing practices in the rapidly growing digital lending space, the FTC cautioned.