The Justice Department, together with the Federal Trade Commission (FTC), today announced a civil enforcement action against Dave Inc. (Dave) and its co-founder, President, Chief Executive Officer and Chairman of the Board of Directors, Jason Wilk, for alleged violations of 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 that the defendants misled consumers by deceptively advertising 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.
According to a complaint filed in the U.S. District Court for the Central District of California, Dave and Wilk market their app as instantly providing consumers “up to $500” without any hidden fees. The complaint alleges that the defendants actually very rarely offer consumers anywhere near the advertised $500, often do not offer any cash advance at all, and 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 lawsuit further alleges that the defendants induce app 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. Finally, the complaint alleges that the defendants have violated ROSCA by enrolling their customers in automatically recurring monthly membership fees without clearly and conspicuously disclosing material transaction terms and without providing a simple mechanism for consumers to cancel those recurring fees.
This complaint, filed by the Justice Department, seeks unspecified amounts of consumer redress and monetary civil penalties from the defendants and a permanent injunction to prohibit them from engaging in future violations. It amends and replaces an earlier complaint that FTC filed, which named only Dave as a defendant and did not seek any civil penalties.
“The Justice Department is committed to stopping companies and their executives from preying on financially vulnerable consumers with deceptive advertisements, hidden fees and subscriptions that are difficult to cancel,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to enforce the FTC Act, ROSCA and other statutes that protect consumers from such misconduct.”
Senior Trial Attorney Sarah Williams, Trial Attorneys Sean Z. Saper and John F. Schifalacqua and Assistant Director Zachary A. Dietert of the Civil Division’s Consumer Protection Branch are handling the case, in coordination with staff at the FTC’s Bureau of Consumer Protection.
For more information about the Consumer Protection Branch and its enforcement efforts, visit www.justice.gov/civil/consumer-protection-branch. For more information about the FTC, visit www.FTC.gov.
A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.
Image by Gerd Altmann from Pixabay
