Wikimedia Commons / Brian Turner
A federal lawsuit accuses a San Antonio financial app company of deceiving customers about cash advances it offers.
The suit, filed Tuesday in San Antonio federal court, also names company co-founders Joshua Sanchez and Ryan Cleary. Federal authorities are asking for $3 million in damages and want the court to issue a permanent injunction against future violations by FloatMe.
FloatMe officials, including Sanchez and Cleary, were unavailable for immediate comment on the suit, which was first reported on by the Express-News.
FloatMe advertises itself as offering "easy cash advances directly to your bank account" via a downloadable app. App users are able to request advances of up to $50, but must pay a $3.99 monthly membership fee, according to the company's website.
The FTC's suit alleges that FloatMe limits the amount customers can receive after first joining to $20 or less. Despite the company's claims that customers who continuing using the app will see their advances increase, just 0.5% received the $50 limit during the most recent financial quarter, according to the feds' complaint.
What's more, FloatMe only lets customers know about income thresholds they must meet to qualify for advances after they have signed up for the service, the FTC alleges. Additionally, income such as tips, gig work, government assistance and military benefits aren't considered for eligibility, according to the suit.
"At least tens of thousands of paying consumers have been prevented from even requesting a cash advance because of these undisclosed eligibility requirements," the FTC argues in its petition. "These consumers are still charged subscription fees, even though FloatMe deems them categorically ineligible to receive Floats."
Further, the FTC's suit alleges that FloatMe charges customers without their approval, including hitting some with multiple subscription fees during the same billing period and charging others for cancelling their subscriptions.
In its court filing, the FTC also alleges internal FloatMe communications show that company was aware that delayed cancellations were "endemic."
"As Sanchez admitted in internal documents, FloatMe explicitly designed its cancellation processes to thwart consumers’ ability to cancel so that the company could reap more subscription fees," the lawsuit alleges. "FloatMe’s original cancellation process was manual-only, delay-filled and error-ridden. And the current processes, as Sanchez explicitly admitted in an internal communication, 'make it difficult for someone to quit' and employ 'friction.'"
FloatMe's app has been downloaded more than 2 million times, according to its website.
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