FTC Accuses Digital Banking Platform Dave of Charging Undisclosed Fees to Users

The name of online banking platform Dave suggests a dependable friend. But after fielding consumer complaints, a regulator says Dave’s cash advance app is not on the level.

The Federal Trade Commission (FTC) is taking Delaware-based Dave Inc. to court, according to a Tuesday (Nov. 5) press release, alleging deceptive marketing practices and charging fees without consent from the app’s users. Dave is charged with violating the FTC Act and the Restore Online Shoppers’ Confidence Act.

According to the FTC complaint, Dave advertises instant access to cash advances of up to $500, but allegedly rarely offers that advertised maximum amount, with many consumers receiving significantly lower advances.

The FTC also accuses Dave of failing to disclose an “Express Fee,” ranging from $3 to $25, for instant access to advances. Consumers who choose not to pay the fee face a wait of two to three business days. The FTC said the fee isn’t disclosed “until after the sign-up process is complete and the user has given Dave access to their bank account.”

An August PYMNTS report on the company’s earnings noted Dave saw a 37% increase in its cash advance program. Dave CEO Jason Wilk described the app’s average users as consumers living paycheck to paycheck.

The complaint also cites a “tip” system, alleging Dave charges consumers a “surprise” 15% fee on advances and presents it as an optional gratuity. According to the FTC, consumers are allegedly misled into believing the tips go toward providing meals for the needy.

“Dave donates just 10 cents for each percentage in tip the consumer clicks on and keeps the rest of the tip amount. Dave’s donation does not pay for the food required to actually provide a meal. Consumers who discover they can leave a lower tip and attempt to do so see food taken away from a cartoon child until the image of the child is finally replaced by an image of an empty plate,” the release said.

A monthly $1 membership fee is also allegedly charged without clear disclosure, and the FTC claims canceling this fee is a difficult process for many consumers.

The case will be presented in the U.S. District Court for the Central District of California.