WASHINGTON, D.C. — The Federal Trade Commission (FTC) has levied sanctions against the online cash advance provider, FloatMe, and its co-founders. The online platform has been accused of using deceptive marketing practices and conducting prejudiced cash advance operations.
The FTC alleges that FloatMe lured consumers with the promise of swift and cost-free cash advances, a pledge that proved elusive for many users. Users found themselves stuck in a loop where they were unable to cancel their subscriptions, and the promised funds failed to materialize as advertised.
A settlement order now demands that FloatMe and its founding team offer customer refunds worth $3 million, terminate deceptive advertising, enhance cancellation methods, and establish a lending program that emphasizes fairness. This is all part of the FTC’s broader mission to hold companies to account for misleading credit practices.
While the app, which charges a $1.99 monthly subscription fee, promised members instant access to cash advances of up to $50, the reality was quite different. Contrary to the advertised “emergency funds,” customers received only $20 initially and were hit with additional fees for instant access.
FloatMe also promoted the claim that customer cash advance limits could be progressively heightened by a sophisticated algorithm. However, the FTC uncovered that no such algorithm existed. Instead, the company used an infrequently successful manual procedure.
The cancellation process posed another hurdle for consumers. Valentine’s Day tactics made disengagement a challenge, with some consumers experiencing a system that rejected cancellation requests without notification.
Even more concerning, the FTC claims that FloatMe discriminated against customers receiving public assistance, by excluding their income from cash advance eligibility considerations and denying them advances while still charging the monthly subscription fee.
Allegations against FloatMe encompass violations of the FTC Act, the Restore Online Shoppers’ Confidence Act, and the Equal Credit Opportunity Act. The settlement order enforces a $3 million compensation for customer refunds, prohibits deceptive practices and mandates a fair lending program.
The FTC’s action against FloatMe carries significant implications, standing as a consumer protection measure within the cash advance industry. It underlines the necessity for transparent and unbiased lending, particularly for vulnerable individuals reliant on public assistance.
This case serves not only to curtail FloatMe’s practices, but also to send a potent message to other entities in the industry: deceptive practices and discriminatory acts will not be tolerated. It also acts as a reminder for consumers to approach cash advance services with caution and thoroughly assess terms and conditions.
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