Cleo AI Settles $17 Million FTC Case Over Deceptive Cash Advance Practices

Cleo AI Settles $17 Million FTC 'Fast Money' Case | PYMNTS.com

The FTC has won a $17 million settlement against online cash advance company Cleo AI. The settlement stems from a complaint by the Federal Trade Commission (FTC) that Cleo had deceived consumers about the amount of money they could get and how quickly they could get it, according to a Thursday (March 27) news release. "The Complaint lays out how Cleo misled consumers with promises of fast money, but consumers found they received much less than the advertised hundreds of dollars promised, had to pay more for same-day delivery, and then had difficulty canceling," Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection, said in the release. According to the FTC, Cleo's advertising promised consumers access to cash advances worth hundreds of dollars, but few customers ever got that amount. And while the ads also promised same-day or instant advances, this service came with a fee, one that still didn't provide users with quick access to cash, the commission alleged. Consumers also told the FTC they were charged monthly fees despite repeated requests to cancel, with Cleo telling them they couldn't cancel their subscription until outstanding cash advances were paid. "There's no other way for me to say it," said one consumer cited in the FTC complaint. "I need my money right now to pay my rent. I have no other option I can't wait three days. I can't wait 1 day I need it now. I would never have used Cleo if I would have thought I would ever be in this situation." In a statement provided to PYMNTS, Cleo said the FTC's allegations were false. Cleo maintains that it is clear in its ads that the amount of cash is dependent on customer eligibility and that it specifies that advances are on a spectrum of amounts. The company said it also makes it clear to customers that they offer faster disbursements to customers willing to pay for that service. Cleo also disputes the FTC's claim that customers could not cancel subscriptions without paying their advances. "Though we strongly deny any wrongdoing and are confident that we would have prevailed in court, putting this matter behind us was the best move to keep our focus where it belongs -- improving the financial lives of millions of Americans," said Colin Jones, Cleo's general counsel. The settlement comes as cash-strapped American consumers continue to seek alternative sources of credit to cover their bills, as PYMNTS Intelligence research has found.

Cleo AI to pay $17 million to settle US FTC charges it deceived consumers

NEW YORK, March 27 (Reuters) - Cleo AI agreed to pay $17 million to settle U.S. Federal Trade Commission charges that the cash advance company deceived consumers about how much money they could obtain and how long it would take, the regulator said on Thursday. The FTC said almost no one received anything close to the maximum $250 and $500 that Cleo advertised for customers of its Cleo Plus and Cleo Builder subscription services, with some advances totaling just $20. Cleo was also accused of falsely promising advances "instantly" or "today," and charged fees for such guarantees - and even then the advances might arrive the next day. The FTC said Cleo also made canceling subscriptions hard, because the New York-based company required customers to first repay outstanding advances, and kept charging $5.99 or $14.99 monthly fees despite repeated requests to cancel. Cleo offers advances through mobile apps on Apple and Google stores, and according to court papers, uses an artificial intelligence risk classifier scoring system. The FTC lawsuit in Manhattan federal court included several complaints from consumers, including one who accused Cleo of "preying on the poor people that need a helping hand." Thursday's settlement requires Cleo to improve disclosures, obtain informed consent before charging for subscriptions and make canceling easy. The $17 million would be refunded to customers. Cleo denied wrongdoing in agreeing to the settlement, which requires a judge's approval. Colin Jones, Cleo's general counsel, said in a statement that the FTC claims were "inaccurate and reflect a fundamental misunderstanding of our business." He nonetheless called settling "the best move to keep our focus where it belongs - improving the financial lives of millions of Americans." (Reporting by Jonathan Stempel in New York; Editing by Mark Porter)