Fintech cash lending app Dave Inc. and its co-founder are accused of misleading consumers with deceptive advertising related to cash advances.
The Justice Department and the Federal Trade Commission are bringing a civil enforcement action against the company and Jason Wilk, who is its co-founder, President, Chief Executive Officer and Chairman of the Board of Directors.
They allegedly violated the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).
Dave is a financial technology company that offers consumers short-term cash advances through its mobile app.
The government’s lawsuit alleges it deceptively advertised Dave’s cash advances, charging hidden fees, misrepresenting how Dave uses customers’ tips and charging recurring monthly fees without providing a simple mechanism to cancel them.
Dave and Wilk market their app as instantly providing consumers “up to $500” without any hidden fees, according to a complaint filed in the U.S. District Court for the Central District of California.
But the feds claim the company actually very rarely offer consumers anywhere near the advertised $500 and often do not offer any cash advance at all.
They allegedly would also charge an “express fee” to get cash advances instantly that they do not clearly disclose before consumers give the app access to their bank accounts.
The app would also allegedly have users to pay a sizeable “tip” on Dave’s cash advances by using a deceptive interface that does not offer a clear way to avoid tipping.
According to the complaint, Dave’s app falsely represents to consumers that the company will purchase or pay for a certain number of meals for needy children based on the size of a customer’s tip, while in reality Dave keeps the vast majority of tips for itself and donates only a nominal sum to charity that is insufficient to purchase the stated number of meals.
In response, Dave said that it is already in the process of eliminating tips and any new members onboarded since Dec. 4, 2024, have transitioned to a new fee structure that does not have the option to tip.
Finally, the complaint alleges that the defendants enrolled customers in automatically recurring monthly membership fees without clearly disclosing it and without providing a simple mechanism for consumers to cancel the recurring fees.
This complaint seeks unspecified amounts of repayment and civil penalties.
Dave, a Nasdaq company, says it has broken no rules and stated the complaint is a “continued example of government overreach and includes numerous allegations that are based on various inaccuracies.”
