The Federal Trade Commission (FTC) has filed a complaint against fintech company Dave for allegedly using “misleading marketing” practices and imposing “surprise” fees for its cash advance services.
Launched in 2017 as a personal finance assistant, Dave went public in 2021 through a $4 billion SPAC deal and now serves more than 10 million customers with a variety of financial services. The company targets “financially vulnerable” or “financially coping” individuals, offering a cash advance feature that advertised up to $500 “instantly.”
The FTC’s complaint states that the full $500 cash advance was only available to a small percentage of users. Consumers wishing to receive funds instantly were required to pay an “express fee” ranging from $3 to $25, which was only disclosed after they completed the sign-up process and granted access to their bank accounts.
Additionally, Dave reportedly charged customers a “tip” equivalent to 15% of their advance. While this tip could be declined, many users were reportedly unaware they had the option. One user expressed frustration, stating, “The interface is set up to trick you into giving the tip…I feel cheated/scammed by this whole process.”
The FTC highlighted that users encountered a screen featuring a cartoon child surrounded by food options labeled “10 Healthy Meals,” “15 Healthy Meals,” and “20 Healthy Meals,” implying that the tip would provide food to those in need. However, the FTC alleges that for every percentage of tip given, Dave only donates 10 cents to the associated cause, retaining the majority.
When consumers try to leave a lower tip, the cartoon child’s food disappears until an empty plate is displayed. According to SEC filings, Dave generated $149 million in revenue from these “tips” from 2022 through mid-2024.
Samuel Levine, director of the FTC Bureau of Consumer Protection, stated, “Dave lured in consumers living paycheck-to-paycheck with false claims of big-dollar advances, then reached into their pockets to give itself a so-called ‘tip.’”
In response to the allegations, Dave stated: “The FTC asserts many incorrect claims regarding Dave’s disclosures and how the Company acquires consent for the fees associated with our products. For the avoidance of doubt, Dave’s ability to charge subscription fees and optional tips and express fees is not in question. We believe this case is another example of regulatory overreach by the FTC, and we intend to vigorously defend ourselves.”