Financial technology firm Dave Inc., which focuses on providing cash advances through its app, is currently being sued by the Federal Trade Commission (FTC) over “misleading marketing.”
According to FTC’s lawsuit, which was filed in Los Angeles on Tuesday, Dave has been promising users up to $500 in cash advances if they sign up for their app. However, FTC found that the company has failed to make good on those promises and that only a small portion of users ended up receiving this amount, while many users failed to get any cash advances.
“Dave’s advertising is dominated by claims that consumers can receive “up to $500” by using Dave, and that they can do so “instantly.” According to the FTC’s complaint, though, Dave’s service failed to live up to its promises,” FTC stated.
FTC also found several other missteps in Dave’s business. The company failed to be upfront with its fees, which range from $25 to receive the cash advance instantly to the $1 fee it charges on a monthly basis. Additionally, the FTC accuses Dave of “charging so-called “tips” to consumers without their consent.”
Reacting to the lawsuit, Dave described it as “another example of regulatory overreach by the FTC” and stated that it intends to “vigorously defend” itself.
Dave’s stock plunged by almost 15% at one point in the after-hours trading before largely recovering later. It previously closed at $37.66 per share and was 336.89% up year-to-date.