FinTech Dave Says DOJ Lawsuit Is ‘Government Overreach’
Mobile banking app Dave is pushing back against claims in a new government lawsuit.
The Department of Justice (DOJ) filed a suit Monday (Dec. 30) against the FinTech and its CEO Jason Wilk, alleging they violated federal law by deceptively advertising Dave’s cash advances, charging hidden fees, misrepresenting how Dave uses the “tips” paid by customers and levying recurring monthly fees without offering a simple way to cancel them.
In a statement issued Tuesday (Dec. 31), Dave responded to the claims saying that the suit amounts to “government overreach” and includes allegations based on inaccuracies.
“The DOJ must prove that there was knowledge of the alleged violation of the law to obtain CMPs,” the company said, referring to the “civil money penalties” sought by the DOJ.
“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. We take compliance and consumer transparency very seriously, and we intend to vigorously defend ourselves in this matter.”
The company said that because tips seem to be a main focus of the lawsuit, it is introducing a new fee structure, eliminating optional tips and express fees for its ExtraCash product.
“As discussed on Dave’s third quarter 2024 earnings call, this new fee structure was the next step in the evolution of the Company’s business model that was taken in the ordinary course,” the statement said.
All new members onboarded on or since Dec. 4 of this year have been moved to this new structure, with the transition for other members underway. Dave expects to complete the full implementation of its new fee structure early in the new year.
The DOJ suit was an amended version of a complaint filed in November by the Federal Trade Commission (FTC), which has since handed off the matter to the Justice Department.
As PYMNTS wrote soon after that suit was filed, the action was the latest example of how “frictions between the regulators and the regulated — in this case, FinTechs — frequently are being played out in the courts.”
The same report also noted that Dave’s stock soared in the wake of the news — which accompanied its earnings — and following the election of Donald Trump. His return to the White House could bring a “rollback of regulatory efforts,” that report said, one that could “conceivably extend to the FTC.”
The post FinTech Dave Says DOJ Lawsuit Is ‘Government Overreach’ appeared first on PYMNTS.com.