Happy New Year to Everyone Except the Dave App

The cash-lending cartoon bear got caught stealing from customers

Look at that friendly bear with all the cash.

He’s so cute.

And smart.

Look at those glasses!

He wants to lend you as much as $500 with no fees!

How kind.

But if the Dave app lends you cash with no fees, how does Dave make money?

Ah. Well, Dave charges fees.

But wait, the bear says “no fees.”

That bear is a liar.

That’s what a new lawsuit filed by the U.S. Department of Justice (DOJ) says.

Instead of fees for the loans, Dave suggested that customers offer a "tip" to the app for the "favor" of the loan. The amount of the tip was up to the consumer, but if no amount was selected, the tip defaulted to 15% whether or not a customer affirmatively selected to tip Dave.

Additionally, Dave told customers that a portion of all tips would go to help provide meals to needy children. DOJ's complaint alleges Dave failed to donate significant tip money to the stated charity and instead kept most of the tip revenue as profit.

Sneaky, that Dave.

Oh, and the bear had one more trick: Customers got subscribed to Dave’s monthly service - which they often only found out when the subscription charge was processed 30 days after their initial cash advance.

So, what’s the big deal? Dave made some money helping people out of a bad spot.

The big deal is Dave took money without asking - and, well, the predatory nature of these “loans.”

Adam Hardy writes in Money.com that a number of cash-advance apps are suggesting they offer a viable alternative to payday loans but may instead offer a similar product in a more tech-friendly package.

Hardy reviews the policies and practices of apps such as Dave, Earnin, and Brigit and finds that:

“. . . consumer experts warn their fees are just as bad as — if not worse than — traditional payday loan APRs, with rates that can easily top 300%. And, they say, the apps can actually trigger overdraft fees.”

Another analysis by the L.A. Times found Dave’s tips amounted to lending at an APR of around 500%.

The DOJ is suing both Dave the company behind the cheery bear AND Dave’s founder and CEO, Jason Wilk.

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