Financial Tech Company Faces Legal Action Over Deceptive Practices
The US Justice Department has taken legal action against financial technology company Dave and its CEO, Jason Wilk, alleging violations of federal law. The complaint, filed in conjunction with the Federal Trade Commission, accuses Dave of luring users to its personal finance app with false promises of cash advances.
Misleading Advertising and Hidden Fees
According to the complaint, Dave advertised cash advances of up to $500, but many users never received the funds. Furthermore, the company allegedly charged hidden fees, misrepresented how customer tips were used, and imposed recurring monthly fees without providing a simple way to cancel them.
Seeking Consumer Redress and Penalties
The Justice Department is seeking unspecified amounts of consumer redress and monetary civil penalties from Dave and its CEO. Additionally, the government is seeking a permanent injunction to prevent the company from engaging in future violations.
Dave Responds to Allegations
Dave has responded to the allegations, stating that many of the claims are incorrect and that it will defend itself against the charges. The company has also announced plans to roll out a revised fee structure, which eliminates tips and “express fees” that regulators claim were charged to customers for instant cash advances.
Streamlined Fee Structure
The new fee structure, which was unveiled earlier, has already been implemented for new customers onboarded on or after December 4. Existing customers are also being transitioned to the revised fee structure, according to Dave.
Revised Complaint Filed
The complaint filed on Monday replaces an earlier complaint filed by the FTC in November, which only named Dave as a defendant and did not seek civil penalties. The revised complaint marks a significant escalation of the legal action against the company.
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