On March 27, the FTC announced an enforcement action resulting in a stipulated order from the U.S. SDNY regarding a cash advance company’s alleged violations of Section 5(a) of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA). According to the complaint, the defendant operated a mobile application promising instant or same-day cash advances, but the defendant’s internal policies allegedly limited advances to amounts lower than advertised. The FTC alleged that first-time customers often received less than what was promised, and instant cash advances often took days to arrive unless additional fee was paid. Furthermore, the defendant allegedly made it difficult for consumers to cancel subscriptions, especially if consumers had outstanding cash advance balances, which resulted in unwanted monthly fees.
The order permanently restrains the defendant from misrepresenting aspects of its goods or services, including fees and cancellation options, and mandates clear disclosures of all material terms before obtaining billing information. The order also requires express informed consent from consumers before charging them and demands a simple cancellation mechanism for negative option features.
A $17 million monetary judgment was entered against the defendant. As part of the order, the defendant must comply with recordkeeping requirements, including records relating to accounting, personnel, consumer complaints, and marketing materials.
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