FTC Refers Case Against Fintech Firm Dave Inc. to DOJ Over Misleading Marketing Practices

The Federal Trade Commission (FTC) has referred its ongoing legal case against online cash advance company Dave Inc. to the U.S. Department of Justice (DOJ), which has since filed an amended complaint in the case. The revised legal action names Jason Wilk, CEO of Dave and the company's co-founder, as a defendant and seeks civil penalties for deceptive business practices.

The case, originally filed in November 2024, centers around Dave's marketing and financial practices, which the FTC alleges misled consumers. The company is accused of falsely advertising its services, promising cash advances of "up to $500" with no hidden fees, only to offer much smaller amounts or, in many cases, no cash advance at all. The complaint also highlights that Dave charges consumers undisclosed fees, including an "express fee" for immediate cash access, which is not clearly communicated before users grant the app access to their bank accounts.

Another key issue raised by the FTC is the company's practice of charging consumers what it calls "tips." These fees, according to the FTC, were not fully explained to customers and were often paid without their clear consent. The "tips" were presented as donations to charity—specifically to provide meals for children in need. However, the complaint reveals that the company only donates a small portion of the tip, with the majority of the funds being retained by Dave.

The amended complaint accuses Dave and Wilk of violating multiple consumer protection laws, including the FTC Act and the Restore Online Shoppers' Confidence Act. The FTC is seeking refunds for affected consumers and civil penalties against the company and its CEO. Furthermore, the commission is urging the court to issue an injunction to prevent the company from continuing its allegedly unlawful practices.

The decision to refer the case to the DOJ was made by a 4-1 vote within the FTC, with Commissioner Melissa Holyoak dissenting. The DOJ, acting on behalf of the FTC, filed the amended complaint in a California district court. The case now moves forward, with the court set to determine the next steps in the legal proceedings.

Dave's misleading advertising and questionable fee structure have raised concerns about transparency in the rapidly growing online cash advance market. The case highlights the need for increased regulatory oversight to protect consumers from deceptive practices in the fintech sector.