The Federal Trade Commission (FTC) announced Tuesday that it will take action against online cash app and neobank Dave for engaging in “misleading marketing to deceive consumers.” At issue is how Dave marketed the rarely offered $500 cash advance to consumers and the “rush fee” he charged customers if they wanted their money right away.
The FTC said Dave's marketing implied that the cash advance was “instant,” did not disclose the fees involved until the consumer completed the sign-up process and paid, and used terms such as “on the spot.” Claimed that the service used was misleading. Dave accesses his bank account.
The complaint states the fees range from $3 to $25. If users choose not to pay the fee, they must wait two to three business days for the standard transfer to complete, the complaint states. Additionally, the FTC said Dave would sometimes charge surprise fees in the form of “tips.” The FTC says the user interface is designed to make it difficult for users to discover or avoid fees, leading to consumers feeling scammed.
This latter issue is another example of “dark patterns,” or manipulative design practices, that companies use to coax users into taking actions that benefit their goals rather than the consumer's. Examples of the types of behavior the FTC currently wants to punish include automatically checking a box when a user signs up, or displaying large buttons that indicate actions the company wants users to take. Examples include things to do.
A recent study by the agency found that the majority of subscription apps and websites use dark patterns to deceive consumers.
In Dave's, consumers are shown an image of a cartoon child surrounded by food and messages such as “10 Healthy Meals,” “15 Healthy Meals,” or “20 Healthy Meals.” displayed, suggesting that the tip would go towards providing meals to those in need. . However, the FTC says each “tip” donated is only 10 cents, and the company keeps the rest. In other words, chips don't really provide a complete meal, much less 10-20 servings. It also depicted food being taken away from children until a consumer was left with an empty plate when they tried to tip less, the complaint said.
According to the FTC, SEC filings show Dave earned more than $149 million in revenue from tips from 2022 through the first half of 2024.
Another issue is that Dave charges a $1 monthly membership fee, which is taken directly from customers' bank accounts. But when users learned of the charges, they couldn't easily cancel, according to the complaint. The FTC said some people were still being charged even after they tried to delete their accounts to avoid the fees.
The full complaint includes several screenshots of Dave's sophisticated techniques, which the FTC alleges violate Section 5(a) of the FTC Act and the Restoration of Online Shopper Confidence Act (ROSCA). I am doing it. The agency is seeking an injunction to prevent Dave from continuing his actions, and could seek awards and other relief if the court decides.
In response to the complaint, Dave said he was “disappointed” that the FTC chose to file a lawsuit.
“The FTC alleges a number of false claims regarding Dave's disclosures and how we obtain fee consents related to our products,” the company's statement reads. . “For the avoidance of doubt, we do not question Dave's ability to charge subscription fees, optional gratuities, and express fees. We believe this case is another example of regulatory overreach by the FTC. We take compliance and customer transparency very seriously and believe that we always act within the bounds of the law. We will continue to focus on serving our members who love and trust our products.”