On November 5, the Federal Trade Commission (“FTC”) filed a complaint against a company in connection with its mobile banking app, alleging violations of Section 5(a) of the FTC Act and Section 4 of the Restore Online Shoppers’ Confidence Act (“ROSCA”) for misleading customers through hidden fees and other deceptive practices. According to the FTC, the app targeted financially vulnerable individuals with surprise “tip” fees, amounting to 15% of cash advances, which was falsely marketed as a charitable donation. While customers were led to believe their tips funded meals for children, only a fraction of the funds was actually donated, while the rest was retained by the company as revenue. Between 2022 and mid-2024, this practice reportedly generated over $149 million for the company.

The FTC’s complaint also highlighted misleading advertisements promising users instant access to cash advances of up to $500. In practice, only a small percentage of users received this advertised maximum amount, with many receiving much lower sums despite meeting repayment conditions. The app additionally charged undisclosed “express fees” ranging from $3 to $25 for expedited access to funds, a cost revealed only after users linked their bank accounts. Those who declined this fee faced a wait of up to three business days.

Moreover, the complaint criticized the company’s implementation of a $1 monthly membership fee, which many users found challenging to cancel. Some reported being charged repeatedly despite efforts to terminate their membership. 

The FTC is seeking a permanent injunction to prevent further violations of the FTC Act and ROSCA by the company, in addition to monetary relief.

Putting It Into Practice: This year, FTC enforcement actions have demonstrated a strong focus on deceptive advertising practices (previously discussed here, here, and here). It is worth noting that the complaint called out a $1 monthly membership fee that was challenging for consumers to cancel despite its small amount. Companies should exercise caution regarding such fees, especially in light of the FTC’s recent finalization of its “click-to-cancel” rule (see our discussion here). 

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