Cleo AI, an online provider of cash advances, has agreed to a $17 million settlement with the Federal Trade Commission (FTC) over allegations that it misled consumers regarding availability and timing of funds. The federal complaint—filed alongside a proposed settlement order—details accusations that Cleo advertised larger cash advances than typically provided, demanded additional payment for same-day delivery, and imposed obstacles in canceling subscriptions.
Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection, remarked, "The Complaint lays out how Cleo misled consumers with promises of fast money, but consumers found they received much less than the advertised hundreds of dollars promised, had to pay more for same day delivery, and then had difficulty canceling."
The FTC further alleges that Cleo's advertisements misrepresented the availability of substantial cash advances and immediate fund accessibility. According to the complaint, even after paying extra for expedited service, consumers sometimes waited until the following day. Additionally, difficulties arose when clients tried to discontinue subscriptions, with claims of being charged fees despite cancellation attempts.
One dissatisfied consumer highlighted their predicament, stating, "There’s no other way for me to say it. I need my money right now to pay my rent. I have no other option I can’t wait 3 days. I can’t wait 1 day I need it now. I would never have used Cleo if I would have thought I would ever be in this situation."
Another individual described their frustration, saying, "I just subscribed and paid for IMMEDIATE 35 dollars. Now I go on here and it says up to 24 hrs. I have my son today and he needs food and I need gas to go get it. I can’t wait 24 hours, or I wouldn’t have bothered."
The settlement outlines conditions prohibiting Cleo from deceiving consumers about loan terms, including available amounts and related fees. Cleo will also be obligated to clearly disclose subscription terms, acquire informed consumer consent prior to charging, and provide an accessible cancellation method.
The $17 million settlement will facilitate refunds for consumers adversely affected by Cleo's practices. The FTC's unanimous vote (2-0) authorized the complaint filing and stipulated final order in the U.S. District Court for the Southern District of New York.
The FTC explained its procedure, emphasizing that a complaint indicates suspected legal violations deemed to serve public interest. Stipulated orders become legally binding once endorsed by a District Court judge.
The matter's staff attorneys, Adam Saltzman and Sally Tieu, are from the FTC's Bureau of Consumer Protection. The FTC reiterates its commitment to promoting competition, while safeguarding and educating consumers, noting that it never demands money or makes threats. Further information on consumer topics is available at consumer.ftc.gov, and fraud can be reported at ReportFraud.ftc.gov.
