The FTC has filed a complaint against the online cash advance app, Dave, charging that the company used misleading marketing to deceive consumers about the amount of its cash advances and charged consumers undisclosed fees and so-called “tips” without their consent.

The FTC noted that Dave describes the consumers it targets as “financially vulnerable” or “financially coping,” suggesting that Dave knew they were particularly vulnerable to its claims that they could instantly receive up to $500,

In its complaint, filed in the U.S. District Court for the Central District of California, the FTC alleged that Dave:

• Offered those advances of up to $500 only a tiny percentage of the time.  The complaint does not specify a percentage but describes the number of such offerings as miniscule.
• Required users to pay an “Express Fee” to get instant access to money. That fee was not disclosed until after the sign-up period was completed and after consumers gave Dave access to their bank accounts. That fee ranged from $3 to $25 and consumers who did not pay the fee had to wait two to three business days for their advances.
• Often charged consumers a fee of 15% of their advances; Dave described that fee as a “tip.” Many consumers were either unaware that Dave was charging them that fee or were unaware that there was any way to avoid the fee, according to the FTC.
• Told consumers that for every percentage of a tip they were giving, Dave was donating a healthy meal to a needy child. The complaint states that Dave donated only a small amount of the tip funds – not nearly enough to pay for a healthy meal – and kept the rest, even though “[c]onsumers who discovered they [could] leave a lower tip and attempt[ed] to do so [saw] food taken away from a cartoon child until the image of the child [was] finally replaced by an image of an empty plate.”
• Failed to clearly disclose that in addition to other fees, consumers were charged a $1 monthly “membership fee” debited directly from their bank accounts.

The Commission vote authorizing the staff to file the complaint was 4-1, with Commissioner Melissa Holyoak voting no, although she did not file a dissenting statement.