Online Bank Dave Updates Fee Structure After FTC Complaint Goes to Federal Court

Shares of Dave Inc. (DAVE) sank 9% Tuesday as the online bank reacted to a move by the Federal Trade Commission (FTC) to refer its complaint against the company to the Department of Justice (DOJ), which in turn filed a lawsuit in a California federal court.

In the initial charge, the FTC said Dave uses “misleading marketing to deceive consumers about the amount of its cash advances, charges consumers undisclosed fees, and charges so-called ‘tips’ to consumers without their consent.”

The amended complaint from the DOJ names co-founder and CEO Jason Wilk as a co-defendant. It said Dave and Wilk marketed the company’s app “as instantly providing consumers ‘up to $500’ without any hidden fees,” when in fact few got anywhere near that amount, if they received money at all. Officials added that customers were hit with an “express fee” in order to get immediate cash advances “that they do not clearly disclose before consumers give the app access to their bank accounts.”

Dave Eliminating ‘Optional Tips and Express Fees’ for ExtraCash Product

In response, Dave argued that the new filing was “a continued example of government overreach and includes numerous allegations that are based on various inaccuracies.” The firm added that because “optional tips seemed to be a primary focal point of the complaint,” it was updating its simplified mandatory fee structure that “eliminates optional tips and express fees for the Company’s ExtraCash product.”

Despite today’s selloff, Dave shares have skyrocketed more than 900% this year.