Wednesday, September 18, 2024
And in yet another sign that checks are passe, the FTC said it will use the online payment service PayPal to get those refunds to nearly half a million consumers who got hoodwinked by FloatMe. Traditionally, the FTC has sent out refunds in cases such as this by check or ACH.
FloatMe promised to rescue consumers struggling to keep their heads above water with quick and free cash advances. The mobile app offered cash advances, or what it called "floats," of up to $50 to consumers in need. All those consumers had to do to qualify was pay a $1.99 monthly subscription fees. The "floats" would then be repaid with deductions from the consumers' bank accounts on their next paydays.
But consumers who tried to get $50 rarely received that much money, if they got any money at all. At most, the FTC said in its complaint, a requesting consumer received only about $20. And when consumers tried to cancel the service they were hit with a raft of fees, despite being told upfront that they could "cancel any time for any reason."
"I was told the solution to cancelling the membership was a link I could click to fill out a cancellation form, once I clicked the link the page was expired and I have absolutely no way to get them to stop charging me" the monthly subscription fee, one consumer complained to the FTC.
According to a complaint filed by the FTC, in January, FloatMe claimed floats were determined by an algorithm, but in reality there was no algorithm. And despite the company's promises of "instant" cash with "no hidden fees," consumers could only get money instantly for an additional $4 charge. Otherwise, they had to wait three days—a fact that was never disclosed upfront.
Some customers paid their monthly subscription fees, then learned the company considered them ineligible to receive any "floats" because they failed to meet certain income thresholds. Income sources that deemed consumers ineligible to receive floats included gig work, tips, pensions, military benefits and public assistance programs, including Social Security—all conditions the FTC said were not clearly disclosed to consumers.
"At least tens of thousands of paying customers have been prevented from even requesting a cash advance because of these undisclosed eligibility requirements. These consumers are still charged subscription fees even though FloatMe deems them categorically ineligible to receive Floats," the FTC wrote in its complaint.
The FTC charged FloatMe and its officers with violations of the FTC Act for making deceptive claims and unfairly charging consumers without their consent. The agency also said FloatMe violated the Restore Online Shoppers' Confidence Act by failing to make required disclosures, failing to get consumers' express informed consent before charging them, and failing to provide a simple mechanism for stopping recurring charges.
The FTC said in a statement that it would send out PayPal notices of pending payments on Sept. 23, 2024, to 449,344 eligible FloatMe members. Recipients should respond to redeem their PayPal payments within 30 days, the agency said. 
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