The US Department of Justice and Federal Trade Commission have launched legal action against Dave, the mobile banking app, alleging that it misled customers over its charges.
The lawsuit which also names Dave CEO Jason Wilk claims that Dave violated US law through deceptive advertising practices linked to cash advances promoted on the platform.
The action also alleges that Dave engaged in hidden fees, misuse of customer tips and inadequate cancellation processes for recurring charges.
A legal action was originally filed back in November but did not seek any penalties, not did it name Wilk as a defendant. This latest filing also calls for monetary penalties, consumer redress and measures to prevent violations.
“The Justice Department is committed to stopping customers and their executives from preying on financially vulnerable consumers with deceptive advertisements, hidden fees and subscriptions that are difficult to cancel,” stated principal deputy assistant attorney general Brian M. Boynton.
Dave has responded to the lawsuit by accusing the DoJ and FTC of “government overreach” and alleging that the lawsuit is based on “various inaccuracies”.
“We believe that we have always acted within the law, and we have continued to rely on the fact that other government agencies have previously reviewed the Company’s business model without taking action,” reads the statement issued on 31 December.
“We take compliance and consumer transparency very seriously, and we intend to vigorously defend ourselves in this matter.”
Dave also added that it introduced a new fee structure on 4 December and is currently in the process of transitioning exiting customers to the new model.