According to a federal lawsuit filed Thursday, the U.S. Department of Justice has levied an amended complaint against fintech company Dave Inc. as well as Chief Executive Jason Wilk for committing federal law relating to deceptive practices in marketing.
This comes shortly after the referral of the same case by the Federal Trade Commission to the federal court.
The complaint claims that Dave Inc. has been deceptive by advertising cash advances of up to $500 on its personal finance app, which, according to reports, was an amount only a few users received. Furthermore, the company is charged with undisclosed fees such as express fees for instant access to cash and recurring monthly fees without providing an easy cancellation process. The DOJ aims to obtain consumer redress, monetary civil penalties, and a permanent injunction to restrain future violations.
Dave Inc. has contested the allegations as an overreaching by the government, based on inaccuracies. According to the company, updates on the company’s fee structure were announced to eliminate optional tips and express fees for its ExtraCash product. Despite experiencing a recent 9% drop in share value due to a lawsuit, its shares have risen more than 900% so far this year.
This development has brought into light the increasing scrutiny that fintech companies face regarding regulatory oversight and, by extension, the necessity for clear and fair consumer practice in the emerging financial technology landscape.
