On November 2, 2023, the Federal Trade Commission (FTC) announced that it had reached a settlement with a New York based personal finance application over claims that the app violated the Federal Trade Commission Act (FTCA), 15 U.S.C. §§ 45(a), 53(b), 57b, and Section 5 of the Restore Online Shoppers’ Confidence Act (ROSCA), 15 U.S.C. § 8404, through alleged deceptive marketing tactics. Specifically, the FTC’s complaint alleged that the app violated the FTCA and ROSCA by offering free, “instant” cash advances if customers signed up for a monthly membership in the service when such services were allegedly unavailable and/or cost a fee. The complaint also alleged that the monthly subscriptions were an unlawful “negative option feature,” because according to the FTC, the consumer’s silence was interpreted as acceptance of the product. The FTC further alleged that the company acted deceptively by advertising that services could be cancelled at will but not allowing consumers with active cash advance loans to cancel the monthly subscription service until the advance was paid off. The complaint also alleged that the company’s cancellation process exceeded the complexity permitted by ROSCA.
As a result of the settlement, the app agreed to pay $18 million in monetary relief, obtain affirmative consent for ”negative option” products, and participate in ongoing compliance marketing and recordkeeping.
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