On March 29, 2021, the Federal Trade Commission (FTC) announced that it had reached a settlement with a California-based mobile banking app, resolving allegations that the company had misled consumers about their ability to access their funds and the interest rates they would receive on their accounts.
As we reported in November of last year, the FTC alleged that the company falsely promised consumers that they would have “24/7 access” to the funds in their account and that requested funds would be received within three to five business days. However, according to the FTC, the company did not deliver on those promises, and some consumers were required to wait weeks or months before receiving their withdrawn funds.
The FTC additionally alleged that the company misled consumers by promising that they would receive high interest rates on their deposits of at least 0.2% or 1.0% when many consumers actually received a much lower interest rate of 0.04% and stopped earning any interest altogether after requesting return of their funds. The FTC found that these alleged misrepresentations violated the FTC Act.
Under the terms of the settlement, the company is banned from operating its mobile banking app or any other product or service that can be used to deposit, store, or withdraw funds. Furthermore, the company will be required to provide full refunds, including interest, to its customers, which consists of at least $2.6 million. The company must also provide periodic updates on its refund efforts to the FTC.