Fintech app Dave faces federal lawsuit for misleading customers

The US Department of Justice (DOJ) is taking action against one at a time when family finances may be stretched to the limit. personal finance software. Fintech application is the subject of Dave and its CEO Jason Wilk sharp correction complaint accuses the company of deceiving financially vulnerable consumers with empty promises and hidden fees.

According to the DOJ, as previously reported ReutersDave enticed users with bold claims of cash advances of “up to $500” – a number most consumers have never seen. Instead, the complaint claims many users received little or nothing. Users were also often hit with unexpected fees, such as “express fees” for instant access to funds, and “tips” that Dave issued automatically without the user’s express consent.

The accusations don’t end there. The original complaint also alleges that Dave showed heartwarming visuals of cartoon children and healthy meals, claiming that users’ tips would fund meals for children in need. In reality, the DOJ claims, only a small portion of the money went to charity.

“Dave targeted struggling consumers with false promises and surprise fees while profiting from their financial hardship,” said FTC Director of Consumer Protection Samuel Levine.

In response to the complaint, Dave’s announced a new fee structure earlier this month, ditching tips and express fees. The changes apply to new customers from December 4, while existing users can also switch to the new plan. The company claims many of the claims are inaccurate and intends to fight them in court.

The original FTC filings revealed just how lucrative these practices were for Dave, estimating that the company generated more than $149 million in revenue from tips alone from 2022 to mid-2024. The DOJ is now seeking civil penalties, refunds for consumers and a permanent injunction to stop similar practices from moving forward. The case is currently in federal court in California.