Sometimes, deals are too good to be true. That was the case for Cleo AI, an online cash advance company that promised consumers fast, up-front cash payments. According to the Federal Trade Commission (FTC), Cleo AI offered consumers a mobile personal finance application that “promises consumers instant or same-day cash advances of hundreds of dollars.” When a consumer requests a cash advance, Cleo AI offers two subscription models, Cleo Plus and Cleo Builder. Once the consumer picks a subscription, they must provide a payment method that Cleo AI can use to obtain a cash advance repayment and subscription and other fees.
According to the FTC’s Complaint filed against Cleo AI, the company limits the cash advances promised to consumers below the advertised amounts. In addition, Cleo AI “falsely promises that consumers can obtain cash advances ‘today’ or instantly,” while it actually takes several days. Cleo AI required consumers to pay an extra fee to obtain the cash advance the same day or the next.
After much dissatisfaction, many consumers attempted to cancel their subscriptions. However, Cleo AI made it difficult to cancel their subscriptions and stop the recurring fees.
The FTC alleges that Cleo AI violated Section 5 of the FTC Act because it made material misrepresentations or deceptive omissions of material fact to consumers that constitute deceptive acts or practices. It also alleges violations of the Restore Online Shoppers’ Confidence Act.
Cleo AI has agreed to pay $17 million to settle the allegations against it.
This settlement reinforces that the FTC will not tolerate companies making misrepresentations to consumers. It also teaches consumers to: a) beware of advertisements that are too good to be true, and b) be wary of providing payment information for a subscription. Once they have your payment information, it is difficult to end the subscription.