Cash Advance Apps Keep Breakin' the Law
The easy money is just too tempting
Payday loans are not new. But, the way payday predators gain access to your bank account has changed.
Now, the key to a limitless supply of cash for payday loan purveyors is in your phone.
An array of fintech companies operate apps that promise easy cash advances and low fees.
Of course, they are not telling the whole story.
Two recent examples of cash advance app companies getting into trouble involve the friendly-sounding Dave and Brigit.
The Federal Trade Commission (FTC) is taking on these payday predators and calling them to account for their misdeeds.
For example, the Dave app lures customers with promises of up to $500 in cash and low or no fees.
The FTC found, however, that Dave does charge fees (but fails to disclose them) and that Dave charges “tips” for its service, but in some cases, deducts the tip from a customer account without their permission.
“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,’” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.
Brigit, too, deceived customers and got caught.
Now, customers of the cash advance app will receive $17 million in refunds.
According to the FTC, Brigit advertised that customers could easily access "instant" cash of $250. However, once customers qualified, Brigit charged a fee for the instance cash feature and also rarely offered an initial advance of $250. Brigit required a subscription to its service in order to access cash advances, and then made it impossible to cancel the $9.99/month fee.