Fintech’s Cash Advance Triggers FTC Complaint: Deception and Discrimination

TLDR:

• The Federal Trade Commission (FTC) has filed a complaint against fintech company FloatMe, accusing it of deception and discrimination in its subscription cash advance offerings.
• The complaint alleges that FloatMe misrepresented the availability of larger cash advances for subscribers, charged hidden fees, made it difficult for consumers to cancel their memberships, and violated the Equal Credit Opportunity Act (ECOA) by ignoring income derived from public assistance programs.
• This complaint follows a similar case against Bridge It, Inc. in 2023 and highlights regulators’ concern over subscription practices, hidden fees, and discrimination based on receipt of public assistance.

The Federal Trade Commission (FTC) has filed a complaint against FloatMe Corp., a fintech company that provides short-term cash advances through its mobile app, alleging deception and discrimination in its subscription cash advance offerings. The complaint, which also includes allegations of violations of the FTC Act and the Restore Online Shoppers’ Confidence Act, is similar to a previous complaint filed against Bridge It, Inc. in 2023 that resulted in an $18 million settlement.

The FTC’s complaint accuses FloatMe of misrepresenting the availability of larger cash advances to consumers who enrolled in its subscription-based membership. The company also allegedly charged hidden fees for “instant” advances, charged consumers for services without their consent, and made it difficult for consumers to cancel their memberships. Despite having nearly 40,000 customers, FloatMe only had two employees handling customer support, requiring consumers to email to cancel their subscriptions.

In addition to these allegations, the complaint accuses FloatMe of violating the Equal Credit Opportunity Act (ECOA) by ignoring income derived from any public assistance program when evaluating consumers for eligibility for a cash advance. The ECOA prohibits creditors from discriminating against applicants based on their income from public assistance programs.

This case is part of a broader trend of regulators focusing on subscription practices, hidden fees, and discrimination in financial products. In its Summer 2023 Supervisory Highlights, the Consumer Financial Protection Bureau (CFPB) highlighted discrimination based on receipt of public assistance as an area of concern. The FTC’s complaint against FloatMe may signal an increasing focus on this issue in the fintech industry.