The Justice Department and the Federal Trade Commission (FTC) have taken legal action against financial technology company Dave Inc. and its co-founder and CEO, Jason Wilk, over allegations of deceptive practices.
The lawsuit, filed in the U.S. District Court for the Central District of California, accuses the company of misleading consumers about its cash advance services, charging undisclosed fees, and enrolling users in recurring subscriptions without clear consent.
Dave Inc., known for its mobile app offering short-term cash advances, markets its services as providing up to $500 with no hidden fees. However, the complaint alleges that most users receive far less than the advertised amount, with many not qualifying for a cash advance at all.
Furthermore, the app purportedly charges an “express fee” for instant transfers, which is not adequately disclosed to users before they link their bank accounts.
Dave illegal subscription schemes
One of the most troubling allegations involves the company’s handling of “tips.” According to the complaint, Dave’s app pressures users to leave substantial tips by making it difficult to opt-out.
The app also claims that these tips help fund meals for needy children, but the lawsuit asserts that only a small fraction of the funds are donated. Most of the money, it alleges, is retained by Dave Inc., casting doubt on the company’s charitable claims.
The government’s case also highlights violations of the Restore Online Shoppers’ Confidence Act (ROSCA).
The complaint accuses Dave of enrolling users in automatically recurring monthly membership fees without providing clear disclosures or an easy cancellation process.
These practices, the government argues, exploit financially vulnerable consumers who rely on the app for short-term financial relief.
Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, condemned the alleged practices. “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,” Boynton said. “We will continue to enforce laws that protect consumers from such misconduct.”
Legal action
The lawsuit seeks unspecified monetary civil penalties and consumer redress, as well as a permanent injunction to prevent future violations by the company.
This legal action amends a prior FTC complaint, which had initially targeted only Dave Inc. and did not include penalties.
The case is being handled by a team of legal professionals from the Justice Department’s Consumer Protection Branch, including Senior Trial Attorney Sarah Williams and Trial Attorneys Sean Z. Saper and John F. Schifalacqua. They are working closely with the FTC’s Bureau of Consumer Protection to bring the matter to court.
This lawsuit is part of a broader effort by the Justice Department and FTC to crack down on deceptive business practices that harm consumers.
By targeting companies that exploit trust and financial insecurity, these agencies aim to ensure accountability and foster fair practices in the marketplace.
