On Monday, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) filed a civil enforcement action against financial technology company Dave Inc DAVE and its CEO, Jason Wilk, alleging violations of consumer protection laws.
The lawsuit claims the company engaged in deceptive practices, including hidden fees, misleading advertising, and unclear cancellation mechanisms for recurring charges.
Dave, which offers short-term cash advances through its app, is accused of falsely marketing its services. According to the complaint, the company rarely provides the advertised "up to $500" cash advances and imposes undisclosed "express fees" for instant access to funds.
The lawsuit also alleges that Dave misrepresents how tips from users are used, claiming they fund meals for children when the company retains most tips.
The FTC and DOJ also argue that Dave's app enrolls users in recurring monthly memberships without adequately disclosing terms or offering a straightforward way to cancel.
The legal action seeks financial penalties and a permanent injunction against future violations.
The company has reacted in a statement, calling the allegations baseless and asserting that it has consistently complied with the law.
"We believe the amended complaint is an example of government overreach and includes numerous inaccuracies," the company stated.
Dave emphasized its commitment to compliance and transparency, pointing out that other regulatory agencies have previously reviewed its business model without taking action.
The company highlighted recent changes to its fee structure, eliminating optional tips and express fees for its ExtraCash product.
These changes, implemented in December 2024, aim to simplify the pricing model and enhance customer satisfaction.
According to the company, all new members have been onboarded under the revised structure, and the transition for existing users is underway. Full implementation is expected by early 2025.
Price Action: At last check on Tuesday, DAVE stock was down 9.85% to $85.16 during the premarket session.
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