The Federal Trade Commission (FTC) has initiated action against the online cash advance app Dave, accusing it of misleading marketing practices. The FTC alleges that Dave deceived consumers about the amount of its cash advances, charged undisclosed fees, and imposed so-called "tips" without consent.
Dave targets consumers described as "financially vulnerable" or "financially coping," including those who frequently overdraft their bank accounts. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, stated, "Dave lured in consumers living paycheck-to-paycheck with false claims of big-dollar advances, then reached into their pockets to give itself a so-called ‘tip.’ Whether the products are called cash advances, payday loans, or something else, the FTC will take action to protect consumers from unauthorized charges and deceptive claims."
The FTC's complaint highlights that Dave's advertising claims consumers can receive up to $500 instantly. However, the service rarely provides such amounts. A consumer cited in the complaint noted that they could only access $25 despite promises of $500. Another consumer reported paying off small advances on time but never receiving the promised $500.
Furthermore, Dave allegedly requires users to pay an "Express Fee" for instant access to funds after signing up and providing bank account access. This fee ranges from $3 to $25. Consumers not paying this fee face delays of two to three business days for fund access.
Beyond this Express Fee, the complaint states that Dave charges a surprise fee described as a "tip," often 15% of the advance amount. Many consumers are unaware of these charges or how to avoid them. One consumer remarked feeling tricked by the process.
Additionally, Dave's interface suggests that tips contribute meals to needy children; however, according to the complaint, only 10 cents per tip percentage is donated while Dave retains most of the tip amount.
Public filings reveal that Dave earned over $149 million from these tips between 2022 and mid-2024. The complaint also accuses Dave of failing to disclose a $1 monthly membership fee deducted directly from consumer accounts.
The FTC contends that these actions violate both the FTC Act and the Restore Online Shoppers’ Confidence Act. The Commission voted 4-1 in favor of filing the complaint in U.S. District Court for California's Central District.
Daniel Hanks and Jason Sanders from the FTC’s Bureau of Consumer Protection are handling this case.
The Federal Trade Commission continues its mission to promote competition and protect consumers through education and enforcement actions against deceptive practices.
